Engineering firm’s pre-tax profits more than double

PRE-TAX profits at Cork-based international engineering group, Kentech, more than doubled last year to $16.8 million (€12.4m).

Accounts filed for the Kentech Group — which employs more than 3,200 people — show the group recorded the increase in pre-tax profits after its revenues increased by 3% from $137.1m to $141.3m in the 12 months to the end of December last.

Pre-tax profits increased from $8.2m to $16.8m.

The Kentech Group — with its headquarters at Little Island, Cork — operates for the oil, gas and petrochemical industries in Russia, Mexico, United Arab Emirates, Qatar, Kuwait and Kazakhstan.

According to the directors’ report for Josar Holdings, the directors “are pleased to see this strong improvement over the results of the previous years”.

The report states “the group has completed a number of major projects across the various regions usually meeting or exceeding customer expectations”.

The group confirmed it closed its operations in Azerbaijan following a review of the market there.

The directors state: “The Middle East continued to perform well even as competition increases in the region. The reported political unrest in the region in early 2011 is having no impact on the group’s operations.”

The group also operates a contract on a Russian island, Sakhalin, north of Japan.

The directors state that “the Japanese earthquake, subsequent tsunami and damage to the nuclear power plants has meant that at the time of this report, Sakhalin island was on radiation alert but there has been no impact to the group operations in the group”.

The directors state a key target for 2011 is to increase pipelines across all regions with particular emphasis on growing the Mexico business.

The group had shareholder funds last year totalling $23.1m that included retained earnings of $20.7m. The group doubled its profit through a lower cost of sales going from $110.5m in 2009 to $106.3m last year.

A breakdown of the group’s revenue show that $75.8m was from construction contract revenue, with $65.4m generated from the rendering of services.

Numbers employed by the group last year declined marginally from 3,261 to 3,212 with staff costs increasing by 6.5% from $58.3m to $62.1m.

The profits take account of depreciation costs of $2.1m

The figures show the group owed directors a total of $1.43m at the end of last year.

A note states: “These arose through agreements to defer payments of previous year’s bonuses and amounts due under service agreements… These loans will be fully repaid during 2011.”

On the macro economic situation, the report states “current global economic conditions have resulted in pricing pressure on tenders, delays in project schedules and delays in payments from clients”.

The note adds: “The group may be affected by delays or default of our customers relating to their payments.

“However, major actions have been taken throughout the group to invoice aggressively and reduce work in progress.”