Kentz delivers the goods with bumper set of pre-tax profits to beat forecasts
Clonmel-based company optimistic about remainder of year
CLONMEL-based engineering firm Kentz has delivered a bumper set of first half results and expects pre-tax profits for the full year to jump about 12pc to as high as $75m (€52m) and revenue to rise 20pc to $1.28bn (€887m)
Releasing figures yesterday, the company said it would "materially exceed" forecasts for the current year as oil majors and mining companies continued to pump billions of dollars into the development of projects around the world despite shaky economic fundamentals in many of the biggest consumer markets.
Pre-tax profit in the first half of the year rose almost 50pc to $37.7m, while revenue was up 48.2pc to $643.5m. Kentz's order backlog at the end of July was $2.4bn, up 49pc since the end of December.
Speaking to the Irish Independent, Kentz finance director Ed Power confirmed that in the second half the group expected to generate similar levels of revenue and similar profit margins.
Chief executive Hugh O'Donnell added that there had been continued significant spending on oil and gas projects around the world. He added that while many macro statistics pointed to difficulties in many econ- omies, the reality remained that there was moderate growth in a number of key countries.
Kentz also points out that the International Energy Agency expects global energy demand to grow 36pc between 2008 and 2035.
The company, which employs about 12,000 people, delivers construction and engineering services to the oil, chemical, mining and petrochemical industries. Half its revenues are generated from contracts with major oil firms such as Shell, ExxonMobil, Chevron and Sasoil.
Just over 36pc is derived from contracts with engineering and project management groups such as Foster Wheeler and Fluor and the remainder comes from mining firms including Ireland's Kenmare Resources, Rio Tinto and Anglo American.
Kentz is majority owned by Malaysia's Peremba group. It's particularly active in the Middle East, Africa and Australia.
Last month, Kentz, along with a joint-venture partner, secured a $2.3bn contract to develop the massive Gorgon gas project off western Australia.
Mr Power said that Kentz continued to scout for acquisitions but wouldn't be rushed into any purchases.
"It's very easy to do the wrong deal," he said.
Kentz moved to the main market of the London Stock Exchange last month and is likely to become indexed shortly which will result in forced buyers of the company's stock as asset managers move to match their portfolios with changes in the FTSE indices of leading shares.