Shares in building services provider Norfolk Group took a pounding yesterday despite a 30% rise in half year profit.
Norfolk said net profit for the first half of 2009-10 was $5.681 million, up from $4.386 million in the prior corresponding half.
Earnings before interest and tax (EBIT) from continuing operations were $11.475 million, up 10% from $10.441 million.
Revenue was $388.387 million, up from $376.576 million, up 3%.
Norfolk declared no interim dividend as it continues to conserve cash as part of a debt reduction scheme.
Despite the apparent good news, the shares fell more than 5.6% to 75.5 cents yesterday.
Perhaps it was the absence of any feel for the next six months, except that it has a solid order book.
"Conditions remain uncertain in some markets, with project deferral still a reality in some sectors and a slow recovery in the New Zealand economy," Norfolk said in a statement to the ASX yesterday.
"A record order book positions the company well for the future."
At September 2009, Norfolk said it had $740 million of 2009/10 revenue underpinned by current contracts, work orders and ongoing service commitments, up from $730 million in the prior corresponding period.
"In addition, Norfolk’s order book has a record value of $820 million," the company said.
Norfolk said its net operating cash flow improved by 101% in the half year to $7.5 million, while net debt fell 24.2% from $59.9 million to $45.4 million.
The company’s senior debt facility expires in July 2010, Norfolk said, but refinancing the facility was expected to be completed by the end of March next year.
"Norfolk continues to operate within its banking covenants and debt facility limits," the company said.
Norfolk said its Electrical and Communications division, which contributes 51% of the Group’s total revenue, reported record first half revenue of $200 million, up 13% on the prior corresponding period.
Norfolk’s Mechanical division lifted revenue to $120 million, up 7%, and its New Zealand operations returned to profitability.
Shares in regional airline, Regional Express Holdings, dropped by more than 14% at one stage yesterday after the company unveiled a surprise 2.9% fall in first quarter profit.
The shares ended down 7 cents, or 6%, at $1.09, falling from the day’s high at the opening of $1.18.
The drop came despite the company’s AGM being told that the airline sees improving conditions in the next quarter.
The carrier said net profit for the three months to September 30 was $3.7 million, unaudited.
That was off a 14.6% drop in unaudited revenue for the quarter at $47.5 million, while total revenue fell by 15.8% to $56.9 million.
"Rex sees the operating environment stabilising and expects the following quarter to achieve similar results to the prior year," the company said in a statement.
Deputy chairman John Sharp told the company’s annual meeting today there had been signs of a recovery in the airline sector.
"The group is unable to provide a profit guidance in light of a highly volatile economic outlook, passenger demand, exchange rate and fuel prices," Mr Sharp said.
"We are in an uncertain economic climate.
"However there are now signs of a recovery. Rex is well poised for whatever lies ahead having spent the last six years strengthening the business.
"We have worked hard on controlling our costs and improving our operations.
"We have taken a conservative approach to our growth and development, funding our capital expenditure entirely from cash generated from operations, leaving Rex uniquely free of debt and with a very strong balance sheet.
"Pel Air has a small debt which will be soon paid off.
"This conservative approach and tight control of costs has enabled us to deliver an average total network ticket price of some 6% less than it was six years ago, even after the inclusion of the increased fuel levy but excluding airport taxes and GST."
The airline posted a 5.6% fall in net profit to $22.98 million in the last financial year.
The company said its board would reassess its dividend postponement in February 2010, with the payment of an interim dividend to proceed if the situation warrants.
