Privately owned infrastructure company Fulton Hogan has managed to boost its bottom line, despite a $340million revenue decline, largely credited to the ailing Australian economy.
However, in what may become a future silver lining, a major Australian contract to install fibre-optic broadband around two states could be worth $A140million ($NZ158million) annually, for each of the next five years.
Also in Fulton Hogan's sights is the Australia's roading authority which looking to increase its present, less than $A2billion annual spend, taking it to $A4billion during the next four years, and New South Wales' pending sale of state assets.
Fulton Hogan's forward order book is down slightly at $3.5billion, with work spread 50:50 between New Zealand and Australia, employing about 5600 staff.
In an interview yesterday, Fulton's managing director Nick Miller said Australia's ''resource states'' contributed most markedly to the 10.5% downturn in revenue, being West Australia and Queensland, but to some extent that was offset by strong infrastructure work across New South Wales, Victoria and South Australia.
''It's been challenging, but rewarding ... the company has performed very solidly year-on-year,'' Mr Miller said.
''[However] Australia has been a mixed bag with the economic uncertainty likely to continue for 12 to 18 months,'' Mr Miller said.
He said the conclusion of the last payment to Shell was ''a major milestone'' with the residual shareholding having been wound down from 4% during the past financial yearShell had held shares in Fulton Hogan for 33 years and in 2009 Fulton set out to buy back a 37.3% stake.
While saying the final payment was $46million, Mr Miller declined to disclose the full cost of the buyback.
It was funded by bank debt and from operating performance, and also some unspecified cash raised from a share issue to shareholders last year.
On the question of company debt, Mr Miller said the debt and debt to equity ratio had declined from 40.2% last full year to 35.3%.
He was upbeat about Fulton Hogan having been awarded the National Broadband Network contracts in South Australia and Western Australia, a project overall worth ''billions'' to complete.
''We secured a package over five years, with an estimated yield of $A140million per year,'' Mr Miller said, describing the high-speed broadband installation as Australia's largest infrastructure project.
Other than some fibre optic work in Auckland about a decade ago, this was a new foray for Fulton Hogan, which is training people in the two states at present. Overall, Australian job numbers are expected to be maintained at around 1900.
Fulton Hogan's network responsibilities include roadside trenching, directional drilling, cabling into the consumer's house and road/footpath reparation.
The fibre-optic work is just one of several new areas being targeted by Fulton Hogan.
''We've continued to diversify beyond our traditional core function of building and maintaining roads to make strong headway in the water, telecommunications, light-rail, airport and port spaces over the past financial year,'' he said.
Mr Miller said New South Wales was preparing to sell state assets; ''poles and wires'', which could present opportunities in the future.
In New Zealand, earthquake-related work in Christchurch and projects in Auckland had ''performed particularly well''.
Fulton opened a combined finance and administrative services centre in Christchurch, creating 40 permanent roles, some of which were staff relocated from other regions, he said.
Major road contract awards during the past year included the Western Belfast bypass in Christchurch and the Huntly section of the Waikato expressway, both part of the Government's Roads of National Significance programme.
''These two projects follow on from the successful completion of the Tauranga Eastern Link, which we were proud to open three months ahead of schedule with our joint venture partners HEB,'' Mr Miller said in an earlier statement.
Fulton had successfully tendered for the New Zealand Transport Agency's maintenance contracts for the West Coast and Northland, and in Australia, two long-term road maintenance alliances in Victoria were also secured.
Expansion of Fulton Hogan's port-related work had continued, with work undertaken at Botany, Melbourne, Burnie and Lyttelton ports during the year.
Water has been another growth area, underpinned by significant progress on the Hunua 4 watermain and the Central Plains water enhancement scheme, Mr Miller said.
Fulton Hogan
Year to June
Revenue: Down 10.5%, from $3.24billion to $2.9billion
Ebit: Up 4% from $225.4million to $234.7million
After tax profit: Up 9.7% from $138.2million to $151.6million
Completion Shell share buyback: Final payment $46million
Key projects won in 2014-15
• Western Belfast bypass, NZ
• Huntly section of Waikato expressway, NZ
• NZTA contracts West Coast and Northland, NZ
• NBN, (fibre optic) South Aust and Western Aust
• King Georges interchange, New South Wales
• VicRoads Eastern and South West maintenance alliances, Victoria
• Lord Howe Island Airport resurfacing
Source: Fulton Hogan
