Engineering group Clough has suffered from a massive fall in operating profit for the 2017 financial year, as revealed by South Africa-based parent company Murray & Roberts.
Engineering group Clough has suffered from a massive fall in operating profit for the 2017 financial year, as revealed by South Africa-based parent company Murray & Roberts.
Clough’s revenue fell 40 per cent to R6.7 billion ($A640 million), with operating profit down 96 per cent to R217 million.
“The major greenfields LNG projects in Australia into which Clough contracted reached completion and strategies are in place to secure work on brownfields LNG projects, operations and maintenance works, and public infrastructure projects,’’ Clough’s parent company said in a statement.
“The platform’s composition of earnings is changing rapidly and currently excludes large contributions from construction work, with income from commissioning work on LNG projects dominating.
“In response to prevailing market conditions, the platform continued to reduce its cost base to preserve margins and be competitive in pursuing smaller brownfields and maintenance project opportunities.”
Murray said Clough’s order book decreased to R5.2 billion from R6.4 billion in FY16.
“In Australia, the Wheatstone hook-up and commissioning project performed well and strong operational performance has been rewarded with significant scope growth,” it said.
“This project was a major contributor to Clough’s earnings during the financial year and is nearing completion.
“Project resources were mobilised to support hook-up and pre-commissioning work for Inpex on its offshore Ichthys LNG project, which will largely replace Wheatstone in terms of project income.
“Clough AMEC secured its first onshore petrochemical maintenance contract in Australia, a five-year contract, with an option to extend for a further five years, to provide maintenance services to Norwegian company Yara International.”
Murray said earnings growth from Clough’s current low base was only expected in the medium term, as global energy producers’ confidence return and they start investing in new projects.
Brownfields operations and maintenance opportunities are also expected to be the main source of earnings from the Australian region for the next few years, it said.
“The first new major greenfields opportunities are expected to be in Papua New Guinea, as energy producers are progressing work associated with new LNG facilities, to be ready for production by 2022,” the company said.
“Complementary markets such as Australia’s mining and infrastructure markets, which have historically been serviced by Clough, present significant opportunities.
“East coast Australian state governments, particularly New South Wales, are developing many large infrastructure projects.
“Clough is well positioned to pursue selected opportunities and has developed partnering strategies for delivering these projects.”
