Civmec's 3Q earnings fall 98.1% to $0.1 mil after accounting for project cost overruns

SINGAPORE (May 14): Civmec, the construction and engineering services provider headquartered in Australia, has announced 3Q19 earnings of A$0.14 million, ($0.13 million) representing a 98.1% decline from its earnings of A$7.2 million a year ago.

This comes after accounting for existing and forecasted cost overruns on some near-completed engineering, procurement and construction (EPC) projects, says Civmec in its results filing on Tuesday.

Revenue for the three months ended March fell 57% y-o-y to A$80.1 million from A$186.3 million a year ago, due to projects completing in the period and the timing of commencement of new projects.

In line with the lower sales revenue, gross profit fell by 57.4% to A$5.3 million from A$12.5 million a year ago.

Other income grew 97.9% to A$0.5 million from A$0.3 million in 3Q18, primarily due to the recognition of final proceeds from an insurance claim received in the period under review.

For the 9M ended March, the group’s earnings fell 51.9% to A$6.9 million from A$14.3 million a year ago.

Nonetheless, Civmec says it is “very optimistic” about the medium- to longer-term future and expects to remain profitable in the current financial year.

This is considering a significant increase in activity in sectors where the group has historically operated most successfully, together with emerging opportunities being presented in the marine and defense sectors, according to the group.

Civmec also highlights that its order book has grown to A$820 million as at end-March from A$540 million at end-2018 – adding that it has received a number of significant package awards during the period and is confident of securing further substantial awards in 2H19.

“We are working with our clients to close out projects which are currently reaching completion and look forward to continued engagement with our blue-chip clients, particularly in the iron ore sector, who are seeking value propositions for their upcoming expansion programs. We will go into FY2020 with a focus on continuous performance improvement across all aspects of the business,” says Patrick Tallon, CEO of Civmec.

Shares in Civmec closed flat at 36 cents.