The major effort to end problematic jobs and offload excess equipment saw Insituform Technologies continue to trim its tunnelling activities last year, enabling the leaner unit to cut gross losses to US$1M while revenues dived 38% to US$69.3M.
Operating losses for the US contractor in the period were down to US$9.4M from nearly US$17M last time. Overheads were higher, chiefly from extra management costs in running the business. However, as the unit is smaller the total operating costs were down by about a third to US$8.3M.
The company was focused on completing existing contracts into early 2006 while implementing a more selective bidding strategy, which resulted in a fall in backlog orders to mid-year. In the second half the backlog resumed growth and stood at US$75.7M at year-end, and margins are improving, the firm said.
Insituform said underused equipment costs – mainly coming as depreciation and operating leases – almost doubled to US$9.2M in 2006. Depreciation and amortisation costs were steady at near US$5M despite the asset base dropping 15% to below US$54M. Capital spend crashed from US$2.5M to less than US$900,000 last year.
At 31 December, the firm’s tunnelling activities had about US$18.7M in claims against third parties, of which US$7.2M has been recorded to income. Legal costs related to claims amounted to US$6.6M last year.
