Engineering firm reports strong activity

AUSTIN Engineering reported strong activity levels across its global operations.
Engineering firm reports strong activity Engineering firm reports strong activity Engineering firm reports strong activity Engineering firm reports strong activity Engineering firm reports strong activity

Staff reporter

Three weeks ago, the Brisbane-based company said activity levels in Perth were at "the highest levels they have been in many years, with up to five truck bodies being completed per week" as it worked to fulfil a large order book that runs well into FY21.

Today, the Jim Walker-chaired company said despite the COVID-19 pandemic, activity levels remain "very strong, and are expected to remain strong for the balance of this calendar year".

Austin reported last month its Chilean operations were operating at high capacity, and today said it had leased a second facility in the La Negra region for an initial six-month period, increasing capacity in Chile by more than 50%.

A longer term lease will be reviewed in early FY21.

Austin said its US facility was running in line with previous guidance, with production levels supported until the end of the financial year.

The company received US government assistance of US$2.4 million to continue to employ its staff for eight weeks.

The news wasn't as good for Austin's other facilities.

In Indonesia, it said the receipt of purchase orders had been delayed.

The company said it remained confident of converting the orders, but it was unlikely that would be this financial year.

The opportunities reflected about A$2.5 million of Austin's previous earnings guidance of $24-28 million, which was withdrawn last month.

Smaller facilities in Colombia and Peru remain closed due to government-mandated lockdowns in those countries, which were recently extended until at least next week.

The company's two Mackay facilities have seen a slight softening in demand, but are operating at close to normal levels.

Austin previously said it was in advanced negotiations to refinance its Australian debt facilities with an international bank, but those talks have been put on hold for six months due to the pandemic.

The company's current debt facilities in Australia and the US expire in November, but it said it was confident of renewing or refinancing them by then.

As of April 10, Austin had unaudited cash on hand of $17.8 million, and net debt of $900,000, excluding AASB 16 lease liabilities.

The company will use proceeds of the sale of land in Chile to repay about $3 million of debt later this month.

Properties in Peru and Chile are still for sale and are expected to be sold at levels above their carrying values of $900,000 and $4.1 million, respectively.

Austin managing director Peter Forsyth said the company remained well-positioned to trade through the challenges that businesses globally are confronting.

"The hard work put in over the past year to procure such a strong order book, particularly in Perth and Chile, is now paying off," he said.

"Whilst it is regrettable that the proposed refinance stalled and that the orders we expected for Indonesia have not yet come through, it is important to keep things in perspective - our balance sheet remains strong with debt at very low levels and operations through to the end of 2020 continue to be supported by a strong order book."

Forsyth said he was confident Austin would emerge from the challenging period in a stronger position.

"We are continuing to win new business to support the revenue base for FY2021 and do not currently see any significant headwinds to the business in the medium-term," he said.

"The vast majority of our clients are still operating and continue to require Austin products to keep their mines running."

Shares in Austin jumped 29.1% to 15.5c, the highest level since mid-March. The stock started the year at 22c.

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