PNG-focused Oil Search (OSH) has chopped its final dividend to conserve cash while planning to move back into an expansion phase this year with a boost to exploration and development spending.
The company told the ASX yesterday in its 2016 annual results report that net profit fell 70% last year as it, like the rest of the industry was hit by the third year of weaker oil and gas prices (which only recovered a little in December, too late to have any meaningful impact).
Profit before one-offs fell to $US106.7 million for 2016 from $US359.9 million a year earlier, as average liquefied natural gas (LNG) prices dropped by a third and oil prices slid 12%.
Net profit after one offs was $US89.8 million ($A120.7 million), compared to last year’s $US39.4 million loss, with both production and sales lifting.
Revenue for the 12 months to December 31 was down 22% to $US1.2 billion despite a 3% rise in production to 30.24 million barrels of oil equivalent and a6% improvement in sales to 30.59 million barrels or oil equivalent (mmboe).
Oil Search cut its full year dividend to 3.5 US cents a share from 10 US cents, with the payment of a final of 2.5 US cents a share, down 1.5 US cents from 2015’s final.
But the company said yesterday it will step up spending in 2017 as it aims to expand output in Papua New Guinea in the next few years.
Oil Search plans to roughly double capital spending this year to between $US360 million and $US460 million, with exploration and development campaigns under way, particularly around a recent find, Muruk in Papua New Guinea, which Oil Search and its partners ExxonMobil Corp and Santos see as very promising.
Oil Search has said it expects to produce between 28.5 million and 30.5 million barrels of oil equivalent in 2017, flat to slightly weaker than last year’s record output.
The shares lost 2.1% to end at $6.92.
Former market darling Aconex (ACX) met its reduced interim earnings guidance as it again confirmed it was a victim of the Brexit vote in the UK last June.
The construction software company, which was a small cap high flier for a while, told the ASX in late January that earnings would be lower as it battled headwinds like the Brexit decision and the impact of the uncertainty caused by the election of Donald Trump.
That saw the shares plunge 45% in a day to a low of $3.10. They have since struggled back to $3.73 as optimism yesterday ahead of the release of the interim report yesterday.
The company said that while revenue jumped 38% to $77 million for the half year, Brexit’s ripples meant that figure was around $3 million under what was expected.
Aconex also said it had lost $1 million due to movements in the value of the US dollar and the euro post Brexit and Trump’s election and also admitted to having been overly optimistic about the growth of the European business on the back of the $96 million Conject buy.
The acquisition and integration costs of Conject led the a statutory net loss of $3.53 million for the half-year to December 31, compared to a profit of $4.55 million in the previous corresponding period.
Aconex said there was a 9% increase in earnings before interest, tax, depreciation and amortisation from core operations to $7.4 million for the half year.
Australia and New Zealand still contribute the most revenue to the business, with the local area growing 6% to $25.27 million. This growth was significantly down on recent previous periods, but CEO Leigh Jasper said this had been anticipated by the company and he was confident the region would continue to grow.
Despite the soft results, Mr Jasper said he was confident the company would maintain a mid-to-long term growth rate of more than 20%. "Aconex is in a strong position. It is the global market leader serving a very large and under-penetrated global market opportunity,” Mr Jasper said on a conference call with analysts yesterday.
For the full-year the company is anticipating revenue of $160-165 million and earnings before interest, tax, depreciation and amortisation (excluding integration costs for Conject) of $15-18 million.
There is no dividend. The shares fell more than 6% to $3.50 – investors remain unconvinced by the company’s message.
McPherson’s (MCP) has slashed the value of its appliances business and nail care brands by $20 million, sending the consumer products group to a first half loss of $11.8 million. Despite the clean up, directors maintained interim dividend at 6 cents a share.
McPherson’s net profit before asset impairments and goodwill write-downs fell 10.8% to $7.9 million as sales slumped 11.4% to $149.1 million, dragged down by the closure of an unprofitable impulse merchandising division and weaker sales of private label and agency brands.
Interim revenue also took a hit from the closure of Woolworths’ Masters hardware chain, which cut sales of McPherson’s appliances brands, Euromaid and Baumatic.
However, its core health, wellness and beauty brands, which include Manicare, Lady Jayne, Dr. LeWinn’s, A’kin, Swisspers, Moosehead and Maseur performed well.
"The deliberate strategy to reduce sales of low margin agency and private label products led to a material improvement in margins across all key brands and a decrease in revenue of 7 per cent," said Mr McAllister, who took the helm in November from long-serving CEO Paul Maguire.
Underlying earnings before interest and tax fell 6.6% to $13.5 million.
McPherson’s wrote down the value of its appliances brands by $12 million after Master’s closure and its Revitanail brand by $7.8 million following range rationalisation.
Net debt more than halved, falling from $93 million to $41 million, and gearing eased from 46% to less concerning 30%. That will make the bankers happier.
Investors appreciated the message and sent the shares up more than 5% yesterday to end the day on $1.18.
But we saw a much stronger performance from veterinary services and pet care retailer Greencross (GXL).
It reported stronger sales and higher earnings in the December half year as its expansion plan continues to track well.
As a result, interim dividend was lifted 18.75% or 1.5 cents to 9.5 cents a share.
It says it hopes to expand its number of retail stores by 21 stores over the year to June 30 after adding 16 stores in the six months to December 31.
That brought the total number of retail outlets to 237. The company also and opened 10 vet clinics to bring the total number of clinics to 164.
Greencross’s net profit for the six months to December 31 rose 17.2% to to $21.9 million as like-for-like sales rose 4.3% across the group.
Greencross said the veterinary division lifted like-for-like sales by 5.3% in the half, thanks to more visits to the group’s in-store clinics and cross-referrals from the retail stores.
CEO Martin Nicholas said the results showed that the company’s integration strategy was working.
“The 2017 interim result is a strong endorsement of our integrated petcare strategy, which has delivered double-digit growth in revenue and earnings,” he said in Tuesday’s statement with the results.
Greencross says it still expects full-year growth in group underlying earnings and net profit growth similar to that of 2016.
The shares were up 6.8% higher $7.08
Like WorleyParsons (WOR) on Monday, fellow Perth-based engineering services firm, Monadelphous Group (MND) couldn’t escape the continuing ripples from the resources boom slide in the December half year.
But unlike WorleyParsons it managed to eke out an interim profit and will give shareholders something for their support, even though the interim dividend has been trimmed by 4 cents a share to 24 cents. WorleyParsons skipped its interim dividend for a second year running. The company yesterday reported a 24% slump in first-half profit as reduced spending and activity by mining and energy customers put pressure on its margins.
Monadelphous said net profit for the six months to December 31 fell to $28.57 million, while revenue was down 15% to $627.1 million. But instead of punishing the company as they did on Monday by selling down WorleyParsons share, investors pushed Monadelphous shares higher yesterday and the proved to be the best performer on the ASX 200, rising more than 11% to $13.16.
That was after director told the market that while conditions were challenging, the environment was stabilising and second half earnings would be in line with the first half.
The company said revenue was down 15% to $627.1 million in the half year.
“We have demonstrated our agility in responding to the downturn in the resources sector by successfully capitalising on our strong position in the maintenance services sector and entering a number of new domestic and international markets,” Monadelphous boss Rob Velletri said in yesterday’s statement.
The company’s upbeat report was more in the vein of Downer which upgraded its earnings guidance after a solid first half performance.
