LONDON (Alliance News) - Cape PLC said Wednesday that pretax profit in its first-half nearly tripled as revenue dropped on adverse currency movements while the company said trading remains in line with expectations, driven by a strong performance in its MENA region.
In its results for the six months to June 29, 2014 Cape said pretax profit jumped to GBP17.1 million from GBP6.1 million in the first-half of 2013.
The critical industrial services provider for the energy and natural resources sectors said revenue dropped 13% to GBP322.3 million from GBP370.8 million last year, with adverse currency movements accounting for 6% of the decrease. The company recorded an underlying reduction of 10%, driven by the completion of a number of significant construction projects during 2013, though said that the drop in group revenue was partially offset by a 3% benefit from its Motherwell Bridge acquisition.
Cape kept its interim dividend flat at the 4.5 pence per share paid for the comparable period in 2013.
On a divisional basis, Cape said that its UK, Europe and CIS region performed in line with expectations, but said that revenue was lower than the previous year, primarily due to the completion of the Group's activities on the Kashagan project in Kazakhstan.
The MENA region performed ahead of expectations, showing strong results in all major countries. Cape said its onerous contract in Qatar continues to perform in line with the operational plan and within the existing provision.
The Asia Pacific region, however, had a slower start to year, said Cape, with subdued construction activity and continued slow demand in the Asia countries.
Order intake during the first-half increased by 33% to GBP317 million from GBP239 million last year, said Cape, with the Motherwell Bridge acquisition and the maintenance contract awarded in Hong Kong being two of the key contributors to that growth.
The company said that trading in the first six months of 2014 has been in line with expectations, with the board expecting a stronger second-half to follow as it focuses on growing the business.
"Market conditions remain mixed with strong demand in the MENA region, but construction activity remains subdued in many other parts of the world. We anticipate a stronger second half as activity ramps up on the Wheatstone LNG project in Australia, UK margins recover to normal levels and the Group continues to benefit from the recent acquisition of Motherwell Bridge," said Chief Executive Joe Oatley.
Cape said that it anticipates that the full-year performance will be in line with expectations and remains confident in its the future growth prospects.
In its full-year results in March the company swung to a pretax profit, despite a reduction in revenues as lower charges helped company finances during the period.
The energy and natural resources engineering technology company posted a pretax profit of GBP200,000 in 2013, compared with a pretax loss of GBP143.2 million in 2012, when the company was hit by a major divestment charges as it streamlined operations which reduced overhead costs by more than 50%. However, the company said full-year revenue fell 5.4% to GBP697.1 million in 2013 from GBP737.0 million the previous year, as the completion of a number of major projects in the first half, such as Kipper Tuna in Australia and Cape's SPT project in Singapore, along with weak market conditions in Kazakhstan and Asia Pacific, hit the company.
Shares in Cape were Wednesday trading at 302.5 pence per share, down 1%.
By Alice Attwood; aliceattwood@alliancenews.com; @AliceAtAlliance
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