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Austin Engineering receives new orders worth $35 million

Published: 16:14 15 Dec 2020 AEDT

Austin Engineering - Austin Engineering receives new orders worth $35 million
The company expects an improvement in business outlook post January 2021.

Austin Engineering Ltd (ASX:ANG) (BOM: 522005) (FRA:RZA) has received new orders for more than 100 products, including truck bodies, water tanks and buckets, totalling more than $35 million in revenue.

This order flow supports previously announced earnings guidance of an underlying net profit after tax of above $9 million, which remains in place.

Austin’s order book and committed work are now more than 70% of expected revenues, which is in line with the same time in 2019 despite the COVID-19 pandemic restrictions.

“Very happy with level of orders”

Austin managing director Peter Forsyth said: “The Asia-Pacific region is performing exceptionally well at the moment with a strong line of sight to keeping our two large facilities in Perth and Indonesia close to capacity.

“I am very happy with the level of orders and further opportunities in this region.

“Offsetting this strength, the Americas are facing challenging operating environments and this is a product of the broader economies in those regions.

“I am heartened by the scale of opportunities in the US, Canada and Chile and we remain confident that the tide will begin to turn early in the New Year in these regions.”

Key workshops close to capacity

The Asia-Pacific region is outperforming expectations with key workshops in Perth and Indonesia well-positioned to remain close to capacity for the balance of the financial year and beyond.

As a result of several macro factors, the economic environment in North and South America is less supportive than contemplated at the start of the financial year, impacting Austin’s order flow in these regions.

The company expects an improvement in business outlook post-January 2021 with annual budgets of US customers replenished on a calendar year basis, along with a completed Presidential transition.

Expecting a surge in business, the company is quoting on a large volume of work in North America with decisions expected early in the third quarter of this financial year.

Business conditions in South America have been impacted by COVID-19, which has delayed several tender decisions for long-term supply contracts for both new equipment and repair and maintenance in Chile.

The company believes it is well-positioned for a number of opportunities but has seen some short-term softness due to the deferment of decisions.

Innovation-led solutions

Austin continues to design products to meet global mining requirements and is at the forefront of design technology and engineering.

Recently, the company designed an ultra-lightweight body that offered a substantial payload increase on previous designs with sufficient structural integrity to remain maintenance free for a shortened design life of less than two years.

This solution will enable the company’s customers to achieve a lower cost per tonne and also provides Austin with a more regular replacement cycle of equipment in this mine.

Forsyth said: “This is a perfect example of Austin leading from the front in providing innovative solutions that suit each of our customers’ needs.

“In this case, we provided our customer with maximum payload in its truck bodies and significant site cost savings thanks to a maintenance-free option for the life of the product, with Austin benefiting from a more regular replacement cycle of this fleet.”

New confirmed orders

Recent confirmed notable purchase orders received include:

  • 78 truck bodies for a large global miner in the Pilbara region of Western Australia;
  • 12 truck bodies for a large global mining contractor for delivery into Queensland, Australia;
  • 8 truck bodies for a large global gold miner in Western Australia; and
  • 3 stairway access water tanks for a large global miner in Queensland, Australia.

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