Americas
A stronger Australian dollar resulted in decreased contributions from the Americas region, reflected in revenue from wholly owned entities reducing by 18.7 per cent to A$961.3 million. Proportionately consolidated revenue in local currency terms saw revenue growth of 9.4 per cent to US$1.2 billion ($1.4 billion in Australian dollars).
Earnings before interest, tax and amortisation (EBITA) margins were impacted by ongoing constrained economic conditions, one-off contract transition costs as well as costs associated with business streamlining initiatives.
The region will benefit from a strengthened executive team that included the appointment of a new chief executive, Larry Ames, during the period.
Resources and Industrial
The Resources and Industrial business saw strong revenue growth of approximately 15 per cent in local currency terms. This was driven by increased activity for our Canadian oil sands joint venture, FT Services, with the successful completion of major outages for Suncor Energy and Shell. This was partially offset by the continued tight trading conditions in the refinery industry, resulting in revenues declining for subsidiary TIMEC compared with the same period last year.
During the period, TIMEC implemented significant streamlining initiatives to help mitigate margin pressure. The outlook for turnaround activity has improved as the rate of scheduled outages is expected to increase on ageing plants. TIMEC has invested in further business development to pursue opportunities in adjacent industries.
TIMEC successfully renewed its top three contracts with Chevron, BP and ConocoPhillips. It also signed a new contract with United States Environmental Services LLC in June 2010 and secured a contract with ConocoPhillips to provide pipeline and terminal maintenance, which is outside of the traditional refinery maintenance sector.
FT Services is actively pursuing opportunities beyond its existing client base across Canada.
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Regional employees: |
7,700 |
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Award: |
TIMEC awarded 22 National Petrochemical and Refiners Association Meritorious Safety Awards. FT Services received an Occupational Health and Safety Award of the Year, Alberta Petro-Chemical Safety Council. |
Miami-Dade Expressway Authority, Florida, United States. Transfield Services has provided asset management, toll operation, incident management and building maintenance services to the Authority since 2001.
Infrastructure Services
Transfield Services North America – Transportation Infrastructure (TSNA-TI) saw modest revenue growth in local currency terms. The business continues to hold its market share within its traditional United States markets as well as securing opportunities in Canada.
TSNA-TI provides state departments of transportation and other government agencies with outsourced road maintenance solutions. The subsidiary has strong market positions in states where these activities are outsourced and expanding, including Florida, Virginia and Texas.
In 2010, TSNA-TI secured contracts with existing clients Florida Department of Transportation and District Department of Transportation, Washington DC and its first contract in North Carolina with the state’s department of transportation.
The business also expanded into Canada, following up on a C$150 million contract win with the Ontario Ministry of Transportation in August 2009 with a C$580 million operations and maintenance partnership with Dexter Construction for the New Brunswick Highway Corporation in April 2010.
In Canada, the key provinces continue to tender projects under public private partnership structures. The spending on United States roads remains static as state budgets continue to be restrained. Regional departments of transportation are seeking federal funding with decisions expected early in the next calendar year.
FT Services completed a major outage during 2010 in 18 days for Suncor Energy at its Fort McMurray, Alberta, Canada operations - two days ahead of schedule, under budget and with zero lost-time injuries.
Property and Facilities Management
Subsidiary, USM, is a leading provider of outsourced facilities management services to the retail industry. USM is represented in 50 states in America and in Canada and Puerto Rico. The services provided by USM allow clients to reduce operating costs, standardise services and improve visibility of spend. By using a service partner to manage the day-to-day service delivery, clients can focus resources on long-term strategic initiatives.
The business grew revenue in local currency terms compared with last year, as it continued to secure organic growth through key contract wins and expansion of work scope with the existing client base. Investment in business streamlining initiatives, business development and one-off contract transition costs saw margins decline in local currency. Improved discipline and a renewed focus on costs and margins are likely to mitigate the potential for other one-off transition issues.
The business continues to drive cost efficiencies to help mitigate ongoing margin pressure. Key initiatives involve centralising the USM head office and back office support functions to Norristown, Pennsylvania, and the ongoing consolidation of IT systems to further improve the service delivery model. The majority of the investments in these initiatives were incurred by the business during the period.
The outlook is positive and the business continues to successfully gain traction with contract wins exceeding US$300 million since July 2009, despite depressed retail trading conditions.
During the year, USM secured work with retailers Bed, Bath & Beyond, Jo-Ann Fabric and Craft Stores, Regis Corporation, Rite Aid Corporation and Sports Authority.