Page 11 - Bradken Annual Report 2013_Page flip

Basic HTML Version

BRADKEN LIMITED ANNUAL REPORT 2013 11
Bradken Limited reported a statutory net profit
after tax for the year ended 30 June 2013 of $66.9
million, however this included a one-off pre-tax
charge of $30.4 million relating to the Federal
Court proceedings associated with the Norcast
acquisition, which will be written back to profit if the
Company’s appeal is successful. While statutory
EBITDA was $183.6 million, underlying EBITDA
before the costs resulting from the Federal Court
action was $214.0 million, a decrease of 2% on
the previous year.
This result was achieved in a quietening market
with sales down 10% to $1,313.1 million and the
result demonstrates the strength of the Company’s
consumable products bias and the defensibility of
our margins.
Amajor highlight of the year was the official opening
of Bradken’s new world class foundry in Xuzhou,
China which is now producing a range of high
quality crawler shoe and mill liner products. This
facility will be a cornerstone of our future growth
and is a credit to the commitment of our people.
We are pleased with the high level of automation
and our capabilities to produce these technically
demanding products. The foundry currently
employs 150 people and is operated by a skilled
local management team.
Bradken also opened its new purpose-built Global
Corporate Centre in March. Our primary focus was
to develop a great place to work for all staff across
multi-disciplines. We identified the need for a
facility that promoted innovative, technological and
collaborative thinking that is integral to the work
that we do.
The laboratory and testing areas, a core part of
the facility, will enable us to undertake full-scale
product evaluations and equipment fit-outs
thanks to the onsite cranage and testing facilities,
which are vital to Bradken’s efforts to assess
suitability and effectiveness of its products in a
laboratory situation.
BUSINESS OVERVIEW
The Engineered Products Division’s sales of $309
million were down in 2013. It was a year of two
extremes for the Division with a vibrant first half result
impacted by a second half decline in sales. The
Division has responded quickly to the reduction in
demand by realigning workforce levels and reducing
fixed costs and discretionary expenses to align with
the current period of slower economic activity.
Mineral Processing’s sales were $250 million in
2013 and saw gross margin increase through
excellent operational performance at the Mont Joli,
Canada facility, the introduction of new differentiated
products into target markets and the rationalisation of
many products into the optimal plant of manufacture.
This led to a strong improvement in quality of earnings
with the additional margin more than offsetting a
moderate increase in overheads that included an
increase in regional selling and product development
resources in line with plans to continue growing the
business in the world’s major mining regions.
Mining Products sales of $413 million were up 4%
on 2012, thanks to record profits from the Crawler
Systems Business and steady global growth from
the GET & Buckets Business. Difficult market
conditions were experienced during the second half
of the year that adversely affected sales; however
the growth in the first half ensured full year growth
and gross margin increase. A fall in commodity
prices during the year led to a slowdown in spending
on capital and maintenance, along with destocking
by the companies mining customers globally.
The Division’s sales in both the Australian and
overseas markets grew due to increased tonnes
mined and the uptake of new Bradken Ground
Engaging Tool (GET) products, despite the
slowdown in mining activity.
The Rail Division’s sales were down to $223
million in 2013. The Division manufactured
1,070 rail cars at the Xuzhou, China facility. This
represented a volume reduction on the prior year
and is reflective of the general down-turn in the
resources sector. The resource sector slow-down
also resulted in flat spare parts sales compared
to 2012.
CMS sales for 2013 were lower than the previous
year as a result of reduced activity in the resources
sector. Most foundries in Australia service this
sector and as a consequence of cost pressures
and the delay or shelving of major projects, foundry
activity reduced accordingly.