Maintenance and project management firm Transfield Services says activity levels in Australia and New Zealand remain subdued leading into the second half of the financial year.
But there may be signs of a pick up in the final quarter, it said.
Transfield made a net profit of $4.6 million in the six months to December 31, a turnaround from a loss of $246.7 million in the prior corresponding period.
The loss in the prior corresponding period included $275 million in impairments.
The company undertook additional cost cutting measures in the six months to December, sold assets in Abu Dhabi and Qatar, reduced capital expenditure, and reduced the unsustainable level of trade creditors.
Chief executive Graeme Hunt said revenue in the first half held steady despite a challenging environment, and overall margins had fallen by only 0.2 per cent.
The company’s infrastructure business in Australia and New Zealand, which represents most of company’s activity, was solid and had performed to expectations.
Transfield expects activity levels experienced in the first half of the 2013/14 financial year in Australia and New Zealand to remain similar in the second half, “but with the return of more positive momentum expected in the final quarter of the financial year”.
The company expects steady short term growth from the coal seam gas and oil and gas sector as liquefied natural gas developments move closer to being commissioned and operational.
Growth in Transfield’s property and asset services business in Australia and New Zealand is expected to continue as the Australian government continues to outsource various functions.
The mining and processing sector in Australia and New Zealand is expected to remain under pressure, especially in exploration.
Transfield said that over the next 12 to 24 months it would continue to sell non-core assets, including its Indian operations.
New contract opportunities were limited in the six months to December, but some deferred contracts appeared to be now coming to market, Transfield said.
No interim dividend will be paid to shareholders.
Transfield shares dropped 11.5 cents to 85 cents.
