GRES stands tall amid commodity fall

In the face of the worst resources downturn in a generation, GR Engineering Services Ltd reported best ever revenues in FY2015. Better still, there is a rosy outlook for the Perth-based engineering firm.

“FY2016 has started well for us and it looks like we are going to have another solid revenue year and we also have a tail of earnings into FY2017, which is good,” GR managing director Geoff Jones told Paydirt. “I am not sure how the market is going to develop through FY2016. Obviously we need some increases in commodity prices for projects to progress to development but it is difficult to determine on an international stage exactly what is going to be the catalyst to force commodity pricing up.”

The services sector has felt the crunch of tapering commodity prices just as much as miners and explorers, in some cases more so. Forge Group was the highest profile casualty and while other firms have avoided complete collapse, the continued downturn has left many on their knees.

GR has not completely avoided the carnage. As recently as 2011/12, it could consistently boast 25 studies on the books, but with project development financing hard to access in the current environment, maintaining 12-14 studies is the new norm.

The quantity may be less, however, there is upside in the quality of study now being demanded to prove projects can withstand the volatility of commodity prices, according to Jones.

“We tend to maintain a reasonably consistent number of projects in the execution phase, but in the last two years the value of the projects we are doing has increased and our completion of EPCM projects has increased. This is reflected in our revenue growth in FY2015 and now FY2016,” Jones said.

GR reported a 90% increase in revenue to $216.9 million in the 12 months from FY2014

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