Engineering and property services group UGL is hopeful of growing earnings in 2014 despite fielding offers for its property business.
UGL says it has endured a complicated and challenging year and recently received several unsolicited offers after announcing plans to split its property and engineering arms by the end of 2014.
The company’s shares fell 85 cents, or 12 per cent, to $6.23 after chief executive Richard Leupen confirmed several private equity outfits had approached UGL.
But, he said, UGL would not reveal the nature of the offers or conduct a formal sale process because it was “destabilising, commercially unsettling, extremely risky and unlikely to achieve a satisfactory outcome”.
“We’re assessing the indicative proposals we’ve had,” Mr Leupen told reporters on Monday.
“We’re not going down the path of offering this up with a for sale sign out the front for anyone who wants to bid.”
Mr Leupen added that it was still unclear whether the proposals were “executable”.
There has been frustration from shareholders keen on the DTZ property business but not the engineering arm and who want the demerger process to occur quicker.
UGL said it increased its half year profit by 13.5 per cent to $29.5 million with its diverse revenue base helping it weather challenging conditions in the local mining sector.
The result includes restructuring costs of $18 million, with further restructuring expected in the second half.
Mr Leupen said Australian engineering work, and oil and gas investment remained weak, but iron ore was showing some signs of life.
“Hopefully, before too long, we’re going to see this domestic Australian marketplace that’s been so weak this last year or so start to grow,” he said.
Growth would be on the back of infrastructure investment, particularly in the power and transportation sectors.
UGL expects full year revenue for its engineering business to be at a similar level to 2013 and the property business to continue its solid growth.
The property business increased its revenue by 18 per cent to $1.08 billion over the half.
UGL anticipates a full year net profit of around $120 million, which is at the lower level of previous guidance.
Mr Leupen added that a legal claim against the company by former executive Robert Shibuya was not backed up by facts.
The company will not pay an interim dividend, “to conserve cash”.
