Bradken Limited Annual Report 2015 - page 26

Year in Review
Lower iron ore and oil prices had a significant impact on our base market with major reductions in capital expenditure and
increased focus on operational spending on key wear consumables. 2015 proved further to be a challenging year for the
Division with most mining companies seeking price reductions from their suppliers.
The Division’s sales decreased 8.7% in 2015. While sales into the iron ore market remained steady, there was a 25%
reduction in sales into the oil sands region, largely attributed to reduced project activity.
Gross margins decreased by 4.3% due to external price pressures and low margin project work being sold in the first half. To
develop our key markets our work mix moved towards a more fully fabricated product, which attracts a lower overall margin.
Foreign exchange movements also affected the cost benefit of supply out of the Xuzhou facility. However the Division remains
focused on reducing manufacturing costs and lead-times by introducing capital expenditure initiatives that reduce both
internal labour and our reliance on sub-contractors.
During the year our Product Development Group officially launched two application products (SMARTLINER and REVOLVER)
both designed to reduce onsite labour during mine inspection and maintenance periods. The Division has already seen
successful installations of each product and has received numerous enquiries from our major customers.
Our design teams have had great success working with mining operational staff to develop supplementary transport and
installation equipment that complements our growing range of rotatable spare services. This, coupled with our newly acquired
portable scanning equipment, has increased the Division’s focus on customer service and onsite asset management.
The Fixed Plant Division creates customised wear solutions through the design and manufacture of a wide range of wear
resistant products to protect fixed plant equipment in both the mining and port operations. The Division’s customers include
some of the world’s largest mining and oil companies with products supplied from manufacturing facilities in Australia, China
and Canada.
At the end of FY15 the Fixed Plant Business was consolidated with the Oil and Gas Business to form a separate Division of
the Bradken Group. The new Division will be focussed on growing the current market share while introducing its products
and services into the global markets of North and South America.
Bradken Expansion Barrels, Edmonton CAN
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