Americas

Against a backdrop of a challenging economic environment, the Americas delivered stable revenue in local currency terms, while EBITDA was moderately down. The result was impacted by the underperformance of the USM facilities management business, which was sold in June.

Proportionately consolidated revenue from the Americas region declined by 10.8 per cent to A$1.2 billion, with currency adjusted EBITDA declining 12.4 per cent to A$59.8 million. 

Our joint venture FT Services secured a C$2-billion contract extension with Suncor, together with major contract wins in the infrastructure roads market.

Resources and Industrial

EBITDA margins in the resources and industrial segment remained stable as contract optimisation and business streamlining initiatives gained traction.  The resources and industrial segment saw revenue decline compared with the same period last year, driven by lower volumes of unscheduled work for both our Canadian joint venture FT Services and the Resources and Energy division in the US.

During the second half, the Americas business restructured to form a Resources and Energy division. The business development efforts are focused on adjacent sectors such as the mining, steel, petro-chemical and power sectors, and adjacent geographies beyond Chile in South America with major global resource companies. The division will focus on the delivery of asset services through maintenance, specialty services, field services and minor capital projects.

Scheduled refinery turnaround activity has increased modestly with the Resources and Energy division successfully completing a major turnaround at the BP Carson and Valero Benicia refineries. Resources and Energy’s refocus on other sectors will help expand our portfolio and reduce a dependence on downstream hydrocarbons. Essential maintenance and warranty shutdown volumes remained stable.

Our joint venture FT Services’ C$2-billion contract extension with Suncor in Canada consolidates our position in the region.  As part of the contract we will continue to provide asset management services to Suncor’s oil sands operations in Alberta until 2016.

FT Services expanded its client base with the award of a three-year maintenance contract with Nexen Inc. at their Long Lake facility in Fort McMurray, Alberta, for more than C$95 million. The company also secured an extension to its existing relationship with Canadian Natural Resources Limited (CNRL) for a further two years. FT Services continues to provide a portfolio of asset management services including maintenance, turnarounds and program execution.

Our joint venture in Chile, Inser Transfield Services S.A. (InserTS), continues to grow, boosted by higher copper and gold prices which fuelled increased capital project spend by our major clients. In addition, significant economic growth in the nearby economies of Peru and Columbia is opening up opportunities for InserTS with existing and new clients.

Infrastructure Roads provides US and Canadian state and provincial departments of transportation and other government agencies with outsourced road maintenance solutions. The business has strong market positions in the regions where these activities are outsourced. It currently has contracts for 27 projects with 14 clients in Alaska, Florida, Maryland, North Carolina, Virginia, Washington DC in the US and in New Brunswick and Ontario in Canada.

Transfield Services joint venture with Flint Energy Services Ltd in Canada captures the emerging opportunities in the oil sands industry.

Infrastructure Services

Infrastructure Roads (formerly trading as Transfield Services North America Transportation Infrastructure) continues to expand its presence with revenue growth in local currency terms. This was driven by organic growth in the Canadian transportation market and increased leveraged work with our existing client base. The business continues to build its presence in the North American market with more than US$240 million of work secured during the year.

Infrastructure Roads is maintaining its market share within its traditional US markets. While US growth remains static, some states may reconsider outsourcing initiatives as a solution to diminished revenues.

In Canada, the province of Ontario continues to outsource its maintenance contracts, a trend that is expected to continue until 2013. Additional opportunities in Alberta and British Columbia have been identified and strategies have been developed to expand our presence in these regions.

The business is in a good position to benefit from an increase in outsourcing activity due to its solid market presence and scale in North America.

Property and Facilities Management

During the second half, the Company announced it had sold USM to EMCOR Group, Inc. The total cash value of the transaction was US$255 million, inclusive of payment for related tax benefits. The transaction was completed on 30 June 2011.

The transaction aligns with the Company’s strategic focus on the two key sectors of resources and infrastructure services, enabling us to target more higher value technical and specialist asset management services.