RCR Tomlinson Limited results: What you need to know

RCR Tomlinson Limited (ASX:RCR) pumps up profits with sale of assets

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Published August 20, 2015 9:59 am AEST

Results out today from engineering and construction company RCR Tomlinson Limited (ASX: RCR) suggest the company is still struggling with falling work in the sector.

RCR reported a net profit after tax of $39.1 million for the full 2015 financial year, which although down 9.7% on the previous year doesn't appear to be a bad result, given revenues fell 13% from $1,300.5 million to $1,129.5 million.

Here's the nitty gritty:

Revenues: Down 13% to $1,129.6m
Net profit after tax: Down 9.7% to $39.1 million
Earnings per share: 28.2 cents
Full year dividend: 11 cents (10% above last year)
Dividend Yield: 6.4% fully franked
Net Debt: $12.2 million (Down 79%. Total Debt $61m, Cash of $49.2m)
Operating cash flow: $32.8m

What the company didn't make clear was that the one-off sale of property, plant and equipment delivered a net gain of $16.4 million, which should really be excluded from underlying net profit.

The good news is that the contractor now has more than $1 billion in work in hand, and has diversified into infrastructure and the energy sectors, as well as its largest earner, resources. A recent acquisition adds work in the water sector too.

Foolish takeaway

RCR Tomlinson could be one of the better stocks in the mining services/construction and engineering sector to watch. But just be aware of one-offs that could pump up profits – for that, the company gains a black mark in my books.

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