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Fulton Hogan lifts annual profit 11%

NZ NewswireNZ Newswire 16/09/2016 Paul McBeth

Fulton Hogan boosted annual profit 11 per cent, outpacing revenue gains, as a number of acquisitions helped widen the tightly held civil construction company's margins.

Net profit rose to $168.7 million in the 12 months ended June 30 from $158.6m, the Christchurch-based company said in a statement.

Revenue advanced 5.9 per cent to about $3.1 billion in what managing director Nick Miller described as a "challenging environment" where multi-national rivals have been attracted to the certainty of New Zealand and Australia's investment pipeline.

The bottom line was bolstered by the introduction of new technology, such as on-site mobile devices, research and development for specialist products and several acquisitions in the year, including quarries in Auckland, Waikato and Wairarapa, and a joint venture in Melbourne operating an asphalt plant.

The construction firm has been focusing on strengthening its balance sheet as part of a share buyback with former cornerstone investor Shell, which has included selling non-core assets and reducing debt.

Miller said Fulton Hogan's gearing ratio - a measure of debt to equity - was down to 26 per cent from 35 per cent in 2015, and that there was plenty of headroom to fund any new acquisitions.

He sees Australia's regional towns as offering the biggest opportunity, with Fulton Hogan generating $1.6b of revenue across the Tasman in a market with a notional value of $84b .

"There's significant opportunity for us to grow in that market, but we've been very deliberate," Miller said.

Fulton Hogan touts its local knowledge, flexible 6,294-strong workforce, and ability to operate and maintain projects after they're completed when pitching to join consortia for major projects, he said.

Miller said the level of activity was varied across Australia, with New South Wales and Victoria growing strongly whereas South Australia and West Australia were soft.

The company's forward order book was $1.9 billion for 2017, up 10 per cent from a year earlier.

Fulton Hogan declared dividends of 62 cents per share in the 2016 year, up from 53 cents a year earlier.

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