Release Date: February 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The group's revenue for the first half of FY '24 increased by 20% to $264 million, driven by improved market conditions and strong customer demand.
- The construction materials and services segment delivered a 22% increase in revenue, with a significant 95% increase in EBIT.
- The bulk haulage business saw a 30% increase in revenue due to secured projects and improved asset utilization.
- The CFT segment experienced a 9% revenue improvement, driven by strong demand for crossarms and power poles in Australia and New Zealand.
- Net debt was significantly reduced by $37.2 million due to improved working capital, better earnings, and rigorous capital expenditure control.
Negative Points
- The concrete business faced challenges with volumes significantly affected by wet weather in December, January, and February.
- The CFT U.S. business delivered a larger than expected loss due to challenges in market establishment and consistent product sales.
- The EFC operations were significantly scaled back, resulting in a $5.7 million impairment of assets and inventory.
- The precast business will see a lower result in the second half due to the completion of the Sydney Metro Tunnel project.
- The overall CFT result for the full year will be negatively impacted by a larger than anticipated loss in the U.S. with no large projects secured for the second half.
Q & A Highlights
Q: Your comment on volume growth, what does that sort of look like? Can you sort of put any numbers around there? And perhaps an update on the bulk haulage strategy?
A: Volume growth is seen across aggregates, cement, haulage, and composites businesses. The demand for composite power poles is particularly strong. The bulk haulage business is performing well, contributing significantly to the overall group, and we will continue to invest in it to stay competitive and improve margins.
Q: Is there going to be any unwind of the working capital benefit through this year? And what will full-year CapEx look like?
A: We do not expect any unwind of the working capital benefit. Full-year CapEx is targeted at $20 million to $23 million, depending on the timing of mobile gear deliveries.
Q: Are cement volumes expected to be in line with the first half?
A: Yes, we expect cement volumes to be consistent with the first half, which is a positive result given January is typically slow.
Q: What sort of percentage or absolute growth in concrete volumes do you expect this year versus FY '23?
A: We are looking at about a 20% growth in volume in the concrete business. The market has been stable, and the volume is being sold at healthier prices.
Q: With respect to revenue growth, how much was driven by volume versus pricing?
A: It is a combination of both. Cement and concrete businesses experienced both volume and price growth. Aggregates saw volume growth but not much price growth. There was also additional project work in bulk haulage contributing to revenue increase.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
