4min read
PREVIOUS ARTICLE Reporting season analysis: Cal... NEXT ARTICLE Reporting season analysis: Bor...

REPORTING SEASON: UGL Limited (UGL)

Brought to you by CommSec

 

Figure 1: UGL Limited 12 month chart

 

UGL Limited (UGL) held back by slowing mining sector

·         Engineering and property services firm UGL Limited (UGL) posted a 22% rise in FY14 underlying profit to $111.7m; in-line with consensus. While margins improved slightly and $4.3bn in new contract wins and extensions were secured, a lack of projects in the mining sector was a drag

·         Slowing investment in the resources space has led UGL to focus on reducing costs and improving efficiencies including spending $39.3m on restructuring its business over FY14. UGL also decided to concentrate on its key operations by selling its DTZ property services business to private equity firm TPG Capital for $1.215bn. The sale is scheduled to be completed later this calendar year. UGL’s NPAT result was hit by $52.7m in separation costs relating to DTZ. UGL also offloaded some non-core properties for $72.5m

·         UGL has decided to implement a capital management plan rather than paying investors a dividend. UGL’s net debt in FY14 was $567m. $400-$500m of the DTZ sale proceeds are however expected to be shared with investors post debt reduction and restructure plans. A $0.05/s dividend in Sept 2013 was the last paid. Its dividend yield in mid-2012 was ~5.5%

·         The engineering firm’s shares are falling for the fourth calendar year, have slumped 8.2 per cent since 1 January and are down post earnings today

·         Looking ahead, UGL expects its engineering business to deliver $2.4bn in revenue in FY15 ($100 million more than FY14) and forecast improved trading margins of between 4-5%

 

You can see all of CommSec’s reporting season analysis by clicking here.

Steven Daghlian, Market Analyst,