Profits up 10% at Kentz despite delays

A SLOW START to some projects kept first-half revenues flat at engineering group Kentz, but the company reported yesterday that profits were up 10 per cent.

Kentz said profits before tax in the first six months of 2009 were up 9.9 per cent at $18.5 million from $16.5 million during the same period last year. Revenues were $328.8 million for the period, virtually in line with the $328.6 million it reported in 2008.

Chief executive Hugh O’Donnell said yesterday a delay in the start of a number of projects on which the company is a contractor was the main reason for the absence of revenue growth. “Many of them are in train and we are confident that we are on track to deliver revenue growth more in line with market analysts’ expectations by the end of the year.”

Kentz has two contracts from oil multinational Chevron worth $526 million, one of them on the world’s biggest natural gas projects, the Gorgon gas field off western Australia. One of the partners in the Gorgon project, Royal Dutch Shell, announced yesterday that it has approved funding for its share of the $37 billion project, which will be based at Barrow Island off the Australian coast.

The field is estimated to contain 42 trillion cubic feet of natural gas, and is Australia’s largest hydrocarbon resource.

The project is mainly split between Chevron, which holds 47.75 per cent and will operate the field, Royal Dutch Shell and Exxon, which hold 25 per cent each, and two Japanese backers, that hold the remaining 2.25 per cent.

Mr O’Donnell said yesterday that, now that Gorgon had got the green light, Kentz hoped to bid for a number of other contracts associated with the project. As it stands, a Kentz subsidiary has a $400 million contract to design, supply and deliver the project’s construction village, and a second deal for the engineering and construction of its telecoms and electronics systems.

In addition, Mr O'Donnell told The Irish Timesthere are up to half a dozen other similar, but smaller, projects due to begin coming on stream in Australia over the next six to nine months, and Kentz also hoped to bid for contracts associated with them.