30.07.2012

Harsco Infrastructure falls 22%

Harsco Infrastructure the access and formwork specialist has reported another poor quarter as massive restructuring costs bite.

Total revenue for the six months to the end of June was $472 million down almost 16 percent on a year earlier. The business also posted an operating loss of $77.9 million compared to a loss last year of $22.6 million, however if the restructuring costs of over $60 million are stripped out the loss was $13.9 million.

While the second quarter was worse in terms of revenue decline – down 22 percent to $234.5 million, the operating loss 24.5 million, after removing the 28.4 million restructuring costs it actually made a profit of $4.06 million – although this was only after a one off gain of $6.7 million involved with asset disposals from the European business.

Harsco says that it expects to spend a further $24 million or so in the second half of the year on restructuring and that it expects the underlying business to soften still further.

Interim chief executive Henry Knueppel said: “Much has been accomplished by our clear focus on sustainable cost cutting and other margin-enhancing initiatives. Despite continuing difficult end-market conditions in our two largest businesses and lower overall sales in the second quarter, we exceeded last year’s EPS results, adjusting for one-time items. We will continue to execute our restructuring plan and maximize our cost savings benefits.”

“However, as we look to the third quarter, we see a further softening in the end markets of our two largest businesses, Metals & Minerals and Infrastructure. We expect Rail to outperform year-over-year, but Industrial is likely to pull back to about even, due to recently volatile energy prices and reduced drilling activity.”

Vertikal Comment

It looks as though the Infrastructure business has yet to ‘find bottom’ and be in a position to start a solid rebuilding. Hopefully all of the rationalisation will be completed by the end of this year and a leaner, fitter and more homogenous operation will emerge.

If this is unlikely then Harsco would do well to find a buyer sooner rather than later.