Forecast profit decline of 20-30% in the AGM address, it was bound to occur when you just roll with the tide!
Let me firstly preface my further comments by stating that I was the former General Manager of the EzyStrut business for 16 years until terminated in 2009.
What cannot be fabricated is that I championed growth of the business from 2.0 million per annum to around the mid 50 million mark on termination and record profitability.
Now back to the business front, over the past 5 years, the business has been favourably exposed to two fairly extraordinary events, the first being an exceptionally high AUD (great for imported products) and the second being an almost doubling of resource infrastructure investment over the same period.
As noted in the AGM address, the future will be somewhat more challenging for Korvest with an unwinding of the infrastructure investment and a softening exchange rate. Government infrastructure investment may provide some relief and potential opportunity for moderate future growth or at least revenue stability, however the timing and likelihood of many projects remains questionable.
Looking further abroad with an International Manager, interesting news given that the NZ operation was closed some years ago instead of maintaining focus on market penetration.
Anyway, it could be time for savvy currency traders to load up, because clearly Korvest must expecting a the AUD rate to plummet, yes i mean plummet, given they expect to compete on an international basis, especially throughout Asia. Of course, anyway who knows just a little bit about steel knows you will never freight low value add products out of Australia, especially to compete with the locals, what a joke!
On a positive note for the Executive team, the Board has managed to double their salaries in the past few years, and the senior managers are paid more than ever before relative to EBIT.
Anyway, a new incoming Korvest Chairman, who knows what the future really holds!
Oh, as a closing remark, EzyStrut was working with International EPCM’s back in the late 90’s and did its first major LNG project in about 2003, so I not sure that the new strategy is actually ‘new’!!!!
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