SCEE's profit slumps 34pc
Southern Cross Electrical Engineering (SCEE) has posted a 34 per cent slump in first-half profit to $4.1 million, citing challenging conditions in the resources sector.
The fall came despite a 28 per cent jump in revenue to $142 million.
The company will not pay a dividend.
SCEE noted the tender process to secure available work had become increasingly competitive and commodity price weakness had resulted in the postponement and cancellation of a number of projects.
The company held cash of $32.3 million at the end of December and its order book stood at $110 million, with $20 million worth of new work awarded since.
Outgoing managing director Simon High said the company had been operating at historically high levels during the first half but market conditions had been extremely challenging and margins remained under pressure.
"As the pool of large-scale projects has decreased, the tender process to secure available work has become increasingly competitive with price the key driver for clients," he said.
The company's margins were 15.7 per cent for the six months ending in December, compared with 16.6 per cent in the second half of 2014 and 23.5 per cent in the previous corresponding period.
Mr High said the company had responded by introducing efficiency measures aimed at reducing overheads.
SCEE said it had reduced its overheads by 8 per cent during the period and was targeting further reductions.
The company said it was unable to issue specific guidance because of the unclear outlook and the risk of further market deterioration.
"Full-year NPAT is uncertain and is dependent on the winning and timing of award and execution of future orders, progress of current projects remaining in line with schedules and closing out existing commercial claims as currently forecast," the company said in a statement.
"In this context, the board does not consider it appropriate to give definitive full-year earnings guidance at the present time."
However SCEE said it continued to monitor and evaluate acquisition opportunities with consolidation in the sector expected.
Shares in the company were up one cent, or 2.56 per cent, to 40 cents at 9am.
