Ausgroup outlook glowing with lucrative Fugro-TSM contract win

A$13m contract likely to be the first of many.

According to a Singapore equity investment research report from OSK-DMG, Singapore-listed Ausgroup greeted the New Year softly with a A$13m contract announcement for fabrication work with Fugro-TSM for Woodside’s Greater Western Flank (GWF) project.

"We are not worried about the small dollar value of this contract. In Australia, it is common business practice to enter into a project with a small amount of work, and later as the quality of work is deemed satisfactory, more contracts will be awarded to the contractor. We expect this contract to grow in the same pattern," said OSK-DMG.

The project is for the fabrication of post metrology subsea spools for the first phase of the project which will commence immediately for a period of 12 months. This is expected to create work for 30 new staff based at the Australian Marine Complex. The A$2.5b GWF Phase 1 project is an extension of the North West Shelf project, and will develop the Goodwyn GH and Tidepole fields.

"Currently, Ausgroup has A$271.1m outstanding order book today. This is equivalent to about 4.4 months of work by our FY13F revenue forecast. Though slightly low, we understand this to be the period where contracts start flowing in, Case in point: At end-FY11 AusGroup had a A$264m
order book, and went on to deliver A$632m of revenue in FY12," OSK-DMG said.