Opus International lifts first-half profit

Domestic gains offset rest-of-world losses.

Opus International Consultants, whose shares soared yesterday on a takeover offer at an 87 percent premium, posted an improved first-half profit as a gain in Australia and New Zealand made up for losses in other regions.

Adjusted net profit rose to $6.2 million in the six months ended June 30, from $900,000 a year earlier, the Wellington-based company said in a statement. Sales fell to $226.8 million from $236.7 million.

A regional breakdown of Opus's earnings show operating earnings before interest and tax from Australia and New Zealand rose to $16.3 million from $13.2 million, although all of the gain came in New Zealand and Australia recorded an ebit loss of $2.2 million.

In the UK it recorded an ebit loss of $140,00 from positive earnings of $1.26 million a year earlier. The Canadian ebit loss narrowed to $618,000 from a loss of $6.5 million, while its other category, which includes unallocated corporate costs, recorded a loss of $4.1 million from a loss of $5.5 million a year earlier.

Opus stock soared 72 percent to $1.70 today after WSP Global Inc, a Canadian listed consultancy firm, announced a takeover offer at $1.78 a share. That comes after extended negotiations with Malaysian Stock Exchange-listed UEM Edgenta Bhd, which owns 61.2 percent of the company, and has entered a lock-up agreement to sell into the offer.

In its takeover documents, WPS said Opus's performance had been negatively impacted by offshore challenges. But the New Zealand market "ticks all the boxes - strong economy, strong government, good engineering backbone," chief executive Alexandre L'Heureux said. "What's attractive is what Opus can do for us in New Zealand and what we can do for them in other countries. We have no presence in New Zealand. This (deal) is hand in glove - a perfect fit."

Opus CEO David Prentice said today that the gains in the New Zealand business were led by a buoyant transport sector.

The company's ebit loss in North America reflected "management actions to improve operating efficiencies and align focus on driving growth in Opus's three global market sectors." It said bidding activity had resulted in "a record future work pipeline for the water sector in North America." The UK business had "encountered Brexit-related headwinds" while in Australia, conditions "continue to be trying".

The company didn't declare a dividend pending advice. WSP said today that its offer allows for Opus to declare a fully imputed dividend of 7 cents a share. Opus's independent directors are to commission an independent appraisal of the proposal.