United Group Reports a Solid First Half

United Group (UGL) has posted a strong first half result with profit jumping 26 per cent to 65 million dollars. The company reported a 26% increase in EBIT to $110.4 million, while first-half operating cash-flow was $46.7 million. UGL Resources EBIT rose 37% and UGL Services posted a 7% increase in EBIT. UGL said gearing (net debt to net debt plus equity) was 31% at 31 December 2008 and that it had zero drawn debt maturing until the 2011 financial year.

Managing director Richard Leupen said while the company's underlying earnings could slow by up to half from its usual 20 to 30 per cent rate, the group remained in a robust position. Mr Leupen said United's usual 20 to 30 per cent full year growth rate was not sustainable in the current climate - it grew underlying earnings by 47 per cent to $136.1 million in 2007/08. The engineering outfit is also boasting a 25 per cent expansion in its order book on last year.

UGL Infrastructure EBIT more than doubled to $34.9 million, while UGL Rail EBIT fell 2% to $35.5 million as a result of greater exposure to operating penalties from the MainCo rail maintenance contract in Melbourne. The company has declared an interim dividend of 29 cents. United Group is predicting full year underlying earnings growth "at the low end of the 10 to 20 per cent forecast range, reflecting the slowdown of project activity in the resources sector".

Leupen said, “But this is a robust and diverse business and the bulk of our revenue comes from providing essential, non-discretionary services”. “While the economy at large is enduring a very challenging period, we are well-placed to ride it out and emerge in even stronger shape”, he added. Unlike some other companies, United Group is on the lookout for staff to add to its 45,000 strong workforce. The company reported revenue of $2.3 billion in the first half, up 48 per cent, and declared an interim dividend of 29 cents, up 21 per cent on the previous corresponding period.