Bradken Limited Annual Report 2015 - page 42

Bradken Limited
Directors’ report (continued)
30 June 2015
Page 7
Bradken Limited
Review of operations (continued)
Operating and Financial Review (continued)
Mineral Processing Division
The Mineral Processing Division is a global manufacturer of custom designed products for grinding mills, crushing and
conveying equipment for the hard rock mining industry. The Division’s customers include the world’s largest mining
companies and some OEMs, with products supplied to mining operations in over 30 countries across five continents.
Products are manufactured in the Division’s manufacturing facilities in Australia, Malaysia, Canada and India as well as
being obtained from other Company manufacturing facilities in Australia, China, the USA and the UK. The Division is the
market leader in the manufacture and supply of grinding mill liners.
Sales of $216 million were down 6% on the previous year due to reduced operations of large mines in Indonesia and Africa,
and commissioning delays in other regions, all now resolved and returning to normal ordering patterns. The Division’s key
manufacturing strategy continues to focus on the relocation of work to lower cost manufacturing facilities, with the transfer to
India planned to begin in 1Q16. Current business focus continues with the introduction of new differentiated products into
existing and new markets where some geographies, particularly the Americas and Africa, already demonstrating good wins.
Mining & Transport Division
The Mining & Transport Division designs, manufactures and supplies consumable wear products for all types of earth
moving equipment to the global mining industry. Products include Ground Engaging Tools (GET), crawler system products
for hydraulic mining excavators and electric rope shovels, and industrial cast products for general industry and Mining
OEM’s. The Division also manufactures and supplies freight rollingstock products including freight wagons, bogies,
drawgear and spare and renewed parts, and services including the maintenance and refurbishment of rollingstock.
While sales of $328 million were down 27% on the previous corresponding period primarily due to lower rail wagon sales,
the restructuring has reduced fixed costs by $25 million. The restructured business will focus on extracting maximum value
and leverage from the reorganisation and rationalised overheads, sale of new products, successful entry into new mining
regions and utilisation of low cost capacity including from the Xuzhou, China foundry.
Fixed Plant Division
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 mining and port operations. The Division mainly services the iron ore,
gold and copper market in Australia as well as oil sand mines in Alberta, Canada.
Lower iron ore and oil prices are having a significant impact on the market with our major customers reducing capital
expenditure projects and a general decrease in key wear consumables. Most mining companies sought price reductions
from their suppliers which meant 2015 was a challenging year for the division. The Division continues to develop a fully
integrated supply chain, for a wide range of wear parts for major mine operations. Overall, the business direction continues
to concentrate on increasing share in existing markets while identifying and gaining sales in targeted mining regions around
the globe not currently serviced by the Fixed Plant Division. With the oil and gas business being consolidated into the Fixed
Plant Division, providing the benefits of more effective utilisation of shared resources, the division has positioned itself to
grow into the global market and replicate its successful business model.
Engineered Products Division
The Engineered Products Division is a leading North American manufacturer of large, highly-engineered steel castings and
differentiated consumable products to the mining, resource, transportation, structural, energy, and military industries. The
Division is a leader in the North American market for large, complex steel castings (over 4,500kg) and has an approximate
30% share of the US large steel castings market. The Division also has foundry capacity in the United Kingdom to serve
European markets.
Sales revenue of $267 million was down 4% on FY14, reflecting continued softness throughout the year in the capital mining
market. The release of deferred military projects, notably submarine builds, are expected to benefit the division in F16 as
well as translation of the US dollar. Sales in F16 are expected to be higher, as improved military and transit rail markets are
projected to offset a lower capital mining market.
Cast Metal Services Business
Cast Metal Services is a supplier of foundry consumable products operating in regions where Bradken has an established
manufacturing footprint. Cast Metal Services customer base consists of 85% internal (Bradken) and 15% external sales.
The Business focuses on traded products and its own consumable products of which manufacturing facilities are located in
Brisbane, Australia and Xuzhou, China. Cast Metal Services is the dominant supplier to the Australian and New Zealand
industry and is expanding globally into other regions.
Sales were up 7% on the previous corresponding period from the net effect of significant new sales in North America
offsetting a 15% reduction of sales in Australia due to contracting market conditions and domestic foundry closures. New
plant and equipment for the business in Xuzhou, China has been commissioned and is proving a catalyst for low cost
refractories and coatings manufacture for promotion and sales globally.
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