Oil and gas exposure drags Opus into red

Chairman Kerry McDonald. Photo / Dean Purcell

Opus International Consultants, the listed engineering firm, sank into the red in the first half after writing down the value of its Australian and Canadian businesses which have struggled on falling oil and gas prices.

The Wellington-based company posted a net loss of $23.1 million, or 16c per share, in the six months ended June 30, from a profit of $15.9m, or 11c, a year earlier, it said.

That included a $22.6m impairment charge on goodwill and a $1.4m charge on the value of its Athabaskan Resource Co joint venture.

"Given the difficult business environments with the decline in oil and gas prices and resource prices generally, we reassessed the value of our operations and impaired the carrying value of Australian assets by A$4.2 million and Canadian assets by C$17.8 million," said chairman Kerry McDonald.

"Our New Zealand and UK businesses continue to show resilience despite subdued global trading conditions and have underpinned the group performance."

In April, Opus said it would restructure its businesses along sector lines rather than country-based divisions to try to draw on staff expertise across borders. The moves were prompted by the weak conditions in Australia and Canada, which both posted operating losses in the latest period.

Opus said underlying operating earnings before interest and tax dropped 79 per cent to $2.5m on a 7.4 per cent decline in trading revenue to $236.8m.

The New Zealand division posted a 4 per cent decline in revenue to $139.1m and a 22 per cent fall in operating earnings before interest and taxation to $14.9m due to slimmer road contract margins after the New Zealand Transport Agency retendered contracts. The UK business posted a 12 per cent fall in ebit to $1.3m on a 4.9 per cent gain in revenue to $35.3m.

Opus' board announced an interim dividend of 2c per share payable on September 30. Last year the company paid an interim dividend of 4.1c per share plus a special dividend of 2c.

The company's shares closed down 11c yesterday at $1.05.