MARKETS SPECTATOR: Ausenco's shopping trip abroad

Engineering and construction company Ausenco hopes to complete an energy acquisition in North America by the year's end, bypassing Australia's mining woes.

Ausenco, the engineering and construction company that generates the majority of its earnings outside Australia, says it is in negotiations to acquire a private company engaged in energy-related work.

Craig Allen, chief financial officer of Brisbane-based Ausenco, declined to name the closely-held Canadian or US company it is in negotiations with or the potential value of the acquisition. Allen says he his hopeful the takeover will be finalised by the end of the year.    

“These things don’t happen overnight,” Allen told Markets Spectator. “We’ve said we want to grow our energy business and materially grow around M&A.”

In 2012 Ausenco had record revenue of $633.5 million: 28 per cent from North America, 22 per cent from South America, 18 per cent from Australia and the rest from Central Asia, Africa and Asia. About 40 per cent of the company’s workforce is in North America. Last year Ausenco acquired Reaction Consulting, a Calgary-based oil sands business.

Allen says the company is seeking to move into alternative and renewable power advisory work in the solar and gas fields. It has not hired an investment bank to advise it on acquisitions but rather has let its corporate development strategy team pursue potential deals.    

Ausenco is positive about its business prospects outside Australia. Allen says North America has not had the iron ore and coal mining project cancellations Australia has experienced. “Australia is reasonably unique” in mining project cancellations, he says.  

As a result of the depressed Australian mining sector, Allen says as much as 45 per cent of Ausenco’s revenue in the next year will come from North America. There is work for the company in North American ports, agriculture as well as its liquid natural gas and oil sectors. Ausenco also has work on an iron ore project in eastern Canada, coal and copper projects in British Columbia and a gold project in the US.

“We don’t see a decline in any particular sector [in North America],” says Allen.

Ausenco has been doing business in sub-Saharan Africa for 13 years. Allen says the continent offers “exciting opportunities”.

Between 20-25 per cent of the company’s revenue is in Australian dollars, 50 per cent is in US and Canadian dollars with the balance in South American currencies, the CFO says.

At 1335 AEST Ausenco shares were down 3 cents, or 1.38 per cent, to $2.14. The ASX/S&P200 Index was up 6.318, or 0.13 per cent, to 4938.

Ausenco shares have dropped 39 per cent in the last 12 months and 33 per cent this year. The S&P/ASX200 Index has gained 21 per cent in the last 12 months and 6.2 per cent this year.

Meanwhile, Wayne Goss has resigned after 11 years as Ausenco chairman. Goss has been ill and had taken a leave of absence from his duties prior to his resignation. He has been replaced by George Lloyd, a company director since 2005 who is also chairman of oil and gas explorer Pryme Energy and bauxite miner Cape Alumina. 

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