Accounts show Kentz profits grow by 37% to almost €22m

PROFITS AT recently floated engineering group Kentz grew by 37 per cent last year to almost €22 million, according to its first set of annual accounts as a quoted company.

Kentz Corporation, which began trading on London's Alternative Investment Market (AIM) in February, said yesterday that profits before tax in 2007 increased by 36.9 per cent to $34.3 million (€21.7 million) from $25.1 million the previous year.

The Irish-managed group said that revenues in 2007 were up 47.2 per cent at $544.6 million from $370.1 million.

Net cash more than doubled to $123.7 million from $57.3 million, the group said.

Profit before tax margins increased to 6.3 per cent in 2007 from a 2005/06 average of 4.8 per cent.

Chief executive Hugh O'Donnell explained yesterday that the group used a two-year average to compare margins as 2006 earnings were boosted by deferred profit from 2005.

Kentz is a contracting business, which means it gets paid in stages or over a period of time. As a result it has a conservative approach to recognising profits.

The company said that last year's strong growth was a result of increasing demand for engineering and construction services, particularly in the oil and gas industries. Kentz specialises in designing and supplying control systems for plants involved in oil and gas refining, and chemical and pharmaceutical production.

In a statement yesterday, the group said that its board expects the current buoyant demand for oil and gas services to continue "for the foreseeable future, particularly in regions that are rich in hydrocarbons such as the Middle East, Russia and Canada".

Kentz has a presence in those three markets. Its clients include multi-national players such as exploration giants Exxon Mobil, Shell and Rio Tinto, and engineering group Flour. It is working with Exxon on the development of the Sakhalin Island oil field on Russia's Pacific coast.

The group said yesterday that its backlog, that is pending and ongoing contracts, were up 9.7 per cent at $596.4 million at the end of 2007 from $543.8 million a year previously.

By the end of January, that backlog had increased to $682 million, while it has received additional letters of intent for new projects worth $250 million.

Kentz raised a total of £66.7 million sterling (€84 million) when it floated on AIM in February. Directors and managers received £48 million while the company received over £18 million.