INFRASTRUCTURE UNCERTAINTY STALLS SEYMOUR WHYTE

A SLOWING of the Queensland transport infrastructure market stalled Seymour Whyte's (ASX: SWL) earnings for the half year period to December, with the company now focusing on geographically diversifying Australia-wide.

Revenue for the Brisbane engineering group decreased 18.2 per cent over the period to $123.3 million, while NPAT declined 34.8 per cent to $3.2 million.

While Queensland is still the primary revenue source for the company, contributing 58 per cent of total revenue during the recent reporting period, SWL managing director David McAdam (pictured) says the group has been focused on building a "more balanced business". The company's half year report notes a less than 50 per cent reliance on individual geographies.

New South Wales is the second largest market for SWL, trailing Queensland distantly to contribute 25 per cent of total revenue.

"Seymour Whyte has been undertaking a transformation over the past two years to build a stronger, more competitive, more balanced business," says McAdam.

"Expanded operations enable us to better withstand changing conditions in individual markets and lessen our historic dependence on Queensland transport infrastructure."

A number of new projects supported this including the $86 million Greater Western Highway and $26 million Green Square Trunk Stormwater Project, both in New South Wales. 

This contributes to SWL's total new project wins of $355 million to increase the company's order book to $450 million but its half year report adds that "trading conditions remain challenging".

The company's contestable market in transport infrastructure is now estimated at approximately $9.6 billion between fiscal year 2015 and fiscal year 2019, Queensland contributing $5 billion to this.

However, there is looming uncertainty around the timing of these new projects and "increased uncertainty in Queensland" suggests the tender pipeline could be pushed back. 

SWL's cash position remains strong at $35.5 million, down from $40.8 million on June 30.

The company will pay an interim dividend of 1.75c per share fully franked, down from the previous corresponding of 2.5c per share fully franked.