McConnell Dowell NZ lifts full-year sales by 36% after winning Watercare, NZTA contracts
McConnell Dowell Constructors posted a 36 percent gain in full-year revenue after winning contracts including the expansion of Watercare's Mangere Wastewater Treatment Plant and the NZ Transport Agency's Russley Road project in Christchurch.
Revenue rose to $278.7 million in the 12 months ended June 30 from about $205 million a year earlier, according to the Auckland-based company's financial statements. It expects revenue to be "similar" in the current year. Operating expenses rose 35 percent to $273 million and net profit climbed to $6.1 million from $2.5 million.
McConnell Dowell Constructors is the New Zealand and Pacific arm of a global construction firm that's ultimately owned by Johannesburg Stock Exchange-listed Aveng, an infrastructure development group. Its financial statements show contract billings were $1.1 billion as at June 30, up 26 percent from a year earlier, while contract costs rose to about $971 million from $737 million.
The company said billings reflect the cumulative effect of two five-year projects - the Waterview Connection in Auckland to provide the 'missing link' between SH20 and SH16 which is being built in partnership with Fletcher Building, McConnell Dowell, Obayashi Corp, Beca, Parsons Brinckerhoff and Tonkin & Taylor. The second is the Stronger Christchurch Rebuild Team, or SCIRT alliance between McConnell, Fletcher, Downer, Fulton Hogan, Citycare, the NZTA, local and central government that is responsible for rebuilding horizontal infrastructure in Christchurch following the earthquakes of 2010 and 2011.
"We are as well positioned in New Zealand for the coming financial year and have a number of very good prospects in our forward pipeline," the company said. "The infrastructure market is very strong at present, and we expect this to continue. We are seeing enormous opportunity in all areas, including water, wastewater, energy and transport (ports, rail and roads)."
In the past 18 months, it has partnered with HEB to win the contract for Watercare's Mangere Bio Nutrient Removal (BNR) wastewater treatment plant expansion, a project Watercare has costed at $136 million with a December 2017 finish date. It also won the NZTA's Russley Road project in Christchurch as a joint venture with Downer, which includes upgrading that section of SH1 into a four-lane highway.
The financial statements show the company had $19.2 million of insurance bonds, up from $8.4 million a year earlier, and $21.7 million of bank guarantees, up from $20 million, which are taken out to cover for performance and retentions during contracts.
Contingent liabilities include damages related to delays in Contact Energy's Te Mihi Geothermal Power station. McConnell was part of the consortium that built the station and incurred liquidated damages for the year-long delay, which has since been settled.
"The consortium believes it is entitled to counter claims against the parties to the contract and the insurance recoveries which will mitigate damages," the company said in the report. The process includes an arbitration hearing with a major equipment supplier that was to start in late August.
The company said the arbitration was progressing as expected and it had nothing further to add from what was in the notes to its accounts. It also said it had made "a number of claims" against North Otago Irrigation Co related to infrastructure work. It was confident they would be resolved satisfactorily.
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