07.11.2013

$238 million write-off on Harsco Infrastructure sale

The disposal of the Harsco Infrastructure business will involve a write-off of $241million plus $12 million in costs.

The business itself saw revenues increase six percent in the quarter, the business also bears the write down costs of the sales, turning last year's operating loss of $6.1 million into a loss this year of $242.1 million this year. The company says that without this the loss would have been reduced to $4 million. The on-going loss is said to reflect lower industrial services activity in the UK and Benelux, partially offset by improved equipment rental and industrial services activity in North America.

Looking at the year to date numbers, revenues are up one percent to $709.8 million while the loss - again driven by the massive write-down - is $256.3 million compared to $83.6 million in the same quarter last year.

Chief executive Patrick Decker said: "Our third quarter results were in line with our guidance, and cash flow generation was quite strong. During the quarter we announced the first major step to transform Harsco through the sale of our Infrastructure business into a joint venture with Clayton, Dubilier & Rice. We are on track to close the transaction in the fourth quarter. The transaction will immediately strengthen our financial profile and increase our financial flexibility to pursue higher return, higher growth opportunities. Moreover, we believe our minority equity stake in the new, stronger infrastructure joint venture will create significant additional value for our shareholders."

"We are committed to strengthening Harsco's financial return profile and are confident that we are taking the necessary actions to achieve this goal. In Metals & Minerals, we are executing initiatives to drive greater returns on capital and operating effectiveness across the business. In Rail, we are actively rebuilding our project backlog and are pleased to have recently announced our strategic entry into the influential European market with a significant contract win valued at $100 million."

Vertikal Comment

There is not much to say here, apart from this fact that a long tortuous relationship between Harsco and the access industry is almost over. Hopefully the new owners/management will be more tuned into the business and that the skills and expertise of those within what was SGB, Hunnebeck and Patent will be allowed to flourish into a profitable and successful operation.