Well done holders, this is the news that we have been waiting for, and desperately needed!
To recap, 2H2014was a tough time for SWL (and the low point in a downturn). We saw the company only book $105m of new work, nowhere near enough to replenish the $160m of revenue they earned in the period. ie. The order book went backwards significantly.
Encouragingly, SWL has now announced $300m of new work contracted in 1H2015, probably double the revenue level for 1H2015. Hence the order book is above $400m. The FY2015 result will not exceed the Fy2014 result due to the tendering expenses in 1H2015 for winning this new work. But if we're patient we will see a very strong revenue performance in FY2016. The company needs to continue to execute on project management to maintain their margins, and we will see this translate to solid growth in the bottom line in FY2016.
Speaking of margins, another positive came from the AGM when management described the utilities market as 'buoyant'. This is important because the EBIT margins for SWL's utilities business (Rob Carr) is around 19%, well in excess of the EBIT margin of the transport business which is mid-single digits. Personally I was contemplating selling SWL just prior to the Rob Carr acquisition based on the low margin and competitive nature of their business. I now see the Rob Carr acquisition as a shrewd move to bolster overall margins and improve the competitive positioning of the company.
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