Wagners reports $10m drop in profits after price dispute
AN ONGOING pricing dispute with construction giant Boral was a major contributor to a drop in profits in 2018/19 for Toowoomba company Wagners.
The ASX-listed construction materials business reported to shareholders a $10 million reduction in pro forma profits in the latest financial year, down to $13m after tax.
CEO Cameron Coleman said the dispute over the price of cement with Boral, which heads to court next month, was a major factor in the change in guidance.
As a result, Wagners opted to not offer a dividend to shareholders and instead invest that cash into other aspects of the business.
However, Mr Coleman said timing issues of large international infrastructure projects also hurt the company's financial performance as well.
"There are some challenges in the construction business related to our issues with Boral," he said.
"We're still very happy with our performance in the 2018/19 financial year.
"There are a couple of large international projects that haven't developed as quickly as we thought they would.
"A decision has been made on those projects now and the money we've invested has us well positioned to play a role in one in Mozambique."
The company also shut down its precast business due to a depressed market, but Mr Coleman said he expected it to pick up once construction on the Inland Rail and Cross-River Rail went ahead in south-east Queensland.
"We flex right up when there's a major project, and then you flex it down when the market goes quiet. That's its nature," he said.
In more positive news, business from the company's bulk haulage section doubled, while its composite fibre technologies manufacturing facility at Wellcamp experienced record production in powerline crossarms.
Wagners' share price remained below $1.50 as of yesterday, less than half its value in March when it was $3.20.
Mr Coleman said he wasn't focusing on the share price, arguing the company's domestic and international investments would turn the price around.
"I'm remaining focused on the profitability and the growth of the business," he said.
Wagners will hold its AGM in Toowoomba on October 30.