SINGAPORE (Feb 13): Construction and engineering company AusGroup saw its earnings fall 87.9% y-o-y to A$0.49 million ($0.47 million) for the 2Q ended Dec 2018 as compared to earnings of A$4.8 million in 2Q18, due to reduced operating activity.

This brings the group’s earnings for 1H19 to A$1.8 million, down fourfold from A$7.2 million in the previous year.

Revenue for the latest quarter fell 61.2% to A$58.3 million as compared to A$150.2 million in 2Q18 in the absence of the completion of major project work in the previous comparative period, as well as timing delays in anticipated new work.

In line with the above, cost of sales fell 62.4% to A$52.2 million from A$138.9 million.

Meanwhile, other operating costs combined with administrative expenses and marketing & distribution expenses grew 19% to A$5 million from A$4.2 million due to lower project recoveries, which AusGroup says is reflective of the decreased operating activities in the current period compared to a year ago.  

Finance costs for 2Q19 on the other hand fell 43.5% to A$1.9 million due to a reduction in external bank debt in FY18, reflecting of a reduction in interest rates following an extension of borrowings for the notes and shareholders loan by four and five years, respectively.

In all, gross profit margin improved 3 percentage points to 10.5% from the previous year, which the group attributes to an improvement in completed projects following final account settlement, and increasing operational efficiencies across its business sectors in the current year under review.

As at end-2Q19, cash and cash equivalents were A$33.8 million as opposed to A$32.2 million at the end of 2Q18.

AusGroup reports that its work in hand has increased slightly to A$167 million as at end-Dec 2018, consistent with A$165 million in the previous quarter.

Going forward, the group says it observes a “renewed optimism” post the re-basing of its debt and injection of working capital, which says will enable it to pursue new work on a equitable basis to its competition.

Nonetheless, it foresees continued challenges in the short-term until the emergence of key work prospects being pursued in 2Q19 are converted to work in hand.

As at 11.02am, shares in AusGroup are trading flat at 3.5 cents.