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Engenco sees profits increase 112 per cent

Company's Convair Engineering arm boasts higher revenue on the back of strong tanker demand


Specialist industrial engineering services company Engenco has more than doubled its net profit in the 2017-18 financial year, saying it is reaping the benefits of its expanded product range.

But the company says that while the sectors where it operates are experiencing growth, signs in the broader economy suggest caution is needed into the future.

“There is growing momentum on a number of fronts and, subject to those ever-present influences which remain beyond the company’s control, organic growth and ongoing efficiency improvements are expected to result in further increases in revenue and earnings in 2018-19,” the company says.

The company did equally well during the first half of the 2017-18 financial year. Check out our story from the time here.

Engenco recorded a net profit after tax of $18 million for the 2017-18 financial year, up 112 per cent on the $8.5 million generated the year before, while its revenue was 22 per cent higher – at $157.3 million from $129.3 million.

The company’s Convair Engineering division recorded a 15.4 per cent increase in revenue to $15.6 million from $13.5 million in 2016-17, while earnings before interest, tax, depreciation and amortisation were also higher, at $1.4 million from $1.2 million the year before.

Engenco says the division has recovered from a period of relatively low demand and compressed margins, with demand for tankers being reasonably strong – due to higher demand from companies involved in Australian construction and infrastructure projects.

“The business remains focused on maintaining production efficiency and high quality,” it says.

Engenco’s Drivetrain division benefited from growing demand for mining equipment maintenance, recording a 35.6 per cent increase in revenue to $52.9 million from $39 million the previous year.

“A range of innovative products for the natural gas compression industry were launched and a gas compression package was completed successfully during the year,” the company says.

“Operational efficiencies included the consolidation of the Newcastle facility with a new purpose-built branch to service the New South Wales coal and industrial markets and a warehouse to service the east coast branch network.”

Engenco’s rail divisions also improved year on year, thanks in part to expanded heavy maintenance activities at Gemco Rail’s facilities in Forrestfield, Western Australia, and Dynon, Victoria; while its recruitment division Total Momentum and training arm CERT Training also expanded.

Company chairman Vince De Santis says the company’s balance sheet gives it a strong foundation for sustainable growth.

“During the year we repaid $4 million in borrowings in addition to investment in our branch networks and capabilities and we have begun the new financial year with a positive net cash balance of $8.3 million,” he says.

The company has also reached an agreement with National Australia Bank to establish new debt facilities totalling $12.6 million which it says will give it flexibility to take advantage of new growth opportunities.

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