Investment Matters

Emeco

Emeco's Canadian operations were significantly challenged, as demand fell considerably - driven by the low oil price.  Emeco is looking to reassign the fleet into other regions.  Operating utilisation stood at 20% at 31-Dec-15.

By contrast, Emeco's NSW operations are an exhibit of what Emeco can achieve - even in difficult operating conditions.  Operating utilisation stood at 65% at 31-Dec-15, with a strong EBITDA margin of 38.2%.  Furthermore, the margin is expected to increase in H2, with one-off new contract costs experienced in H1 and further benefits from the company's efficiency program to flow through in H2.

Emeco's Queensland operations have exhibited a good turnaround in the half.  Operating utilisation was 50% at 31-Dec-15, with a 31.9% EBITDA margin.  Additional revenue, and higher margins are expected in future periods, with new contract starts and operational scale.

Emeco's WA operations had a revenue decline in the half, which flowed through to a smaller absolute EBITDA.  Operating utilisation was 40% at 31-Dec-15.  Conditions (including utilisation) ticked up later in the half, with an expanded customer base likely to provide new contract opportunities in the coming year.

Emeco's Chile operations are humming along quite nicely.  Operating utilisation was 75% at 31-Dec-15.  Revenue grew pcp and on H1FY-15, and the EBITDA margin also increased to 41.1%.

Overall, revenue was flat as compared to the pcp, with EBITDA up 43% pcp to $23.2m (but down on H2FY-15).  The company made an underlying loss of $4.2m for the half (Emeco has high depreciation costs).  Emeco is forecasting EBITDA between $53.0 and $57.0m for FY-16.  Emeco is fundamentally cheap.  As evidenced by this half's NSW result, Emeco has the opportunity to turn around operational performance, even in difficult operating conditions.  

Emeco Half Results 26 2 16