Austin Consolidates Operations

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    Austin Engineering Limited (ASX: ANG, Austin or the Company) as part of the ongoing strategic review
    previously announced, has determined to consolidate its two separate businesses located in Mackay,
    Queensland. The Mackay businesses primarily deliver onsite and offsite repair, maintenance, and
    machining/line boring services, as well as local sales support for Austin manufactured products.
    The business consolidation will be focused on enhancing the sales and support of Austin’s own
    manufactured product offerings into the region and in the continued provision of high-quality machining and
    line boring services.
    The decision has been made following a review of how Austin can best serve its customers in this region
    through a stronger focus on new product delivery and support, with a reduced focus on highly competitive
    and price driven repair and maintenance services which have not delivered significant earnings margins in
    previous years.
    Austin will continue to deliver its own product offerings to the East Coast of Australia from its manufacturing
    facilities in Perth (Australia) and Batam (Indonesia). Over the last four years, Austin has sourced the
    majority of new product to the East Coast market from its world-class, low cost, manufacturing facility in
    Batam. This approach has enabled our customers to gain the benefits of an Australian designed and
    supported product at a competitive price.
    As a result of this decision, Austin will close its Austin Mackay workshop on Len Shield Street, Paget, and
    consolidate to the Progress Drive, Paget site. Austin estimates the one-off cash restructuring costs from
    the consolidation to be in the region of $0.6 million, primarily in redundancies and is expected to incur a
    non-cash goodwill write down of $1.2 million in FY2021. It is expected that approximately $4 million in
    balance sheet capital will be unlocked through sale or re-distribution of assets following this closure. The
    closure of the Len Shield workshop, which is primarily focussed on repair and maintenance, is not expected
    to negatively impact the future performance of the business. For FY2021, the Len Shield workshop will
    contribute in the region of $9.7 million in revenue and a $0.2 million loss in EBITDA.
    Austin is engaging with its clients to confirm its strengthened and more focussed commitment and support
    for the provision of high-quality Austin manufactured products to the region.
    In addition, the ongoing strategic review has identified a number of other potential labour efficiencies that
    can be realised across the global business. The Board has elected to pursue these, which will result in
    one off restructuring costs in the region of $1 million, across the broader business, over and above the
    restructuring costs identified above in the closure of the Len Shield workshop. Austin expects to be able
    to quantify the ongoing impact on the cost base once the strategic review is finalised. The majority of these
    changes will occur over the next 3 months (i.e. within FY2022).
    The overall impact of these decisions will not impact underlying FY21 results, and Austin confirms that
    guidance for underlying NPAT (i.e. prior to one off costs) in excess of $9 million for FY2021 remains
    unchanged.

    courtesy of Bell Direct
    ============================================================================

    DYOR

    i hold ANG

  2. 82.9k
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    Austin Completes Global Strategic Review
    Highlights:
     Strategic review of global operations completed, identifying significant business
    optimisation and growth opportunities.
     Innovation and technology will be used to develop products and systems to meet the
    needs of major miners to reduce site manning, improve productivity and safety, and meet
    decarbonisation goals.
     Advanced manufacturing methods to be adopted at Austin’s major global manufacturing
    facilities to boost productivity, optimise labour efficiency, and facilitate exports.
     Mining product offering to be expanded with discussions already underway on new
    opportunities.
     Cost base optimisation is well advanced and expected to strengthen FY22 earnings.
    Global mining equipment design and manufacturer, Austin Engineering Limited (ASX: ANG, ‘Austin’ or
    ‘the Company’) is pleased to advise it has completed the, previously announced, strategic review of its
    global business and has already begun implementation of a multi-phase program of improvements.
    Austin initiated the strategic review in May 2021 in parallel with the decision to relocate its headquarters
    from Brisbane to Perth. This has been done to bring the Company’s central management closer to Austin’s
    major mining customers and its largest APAC manufacturing centres in Perth and Indonesia.
    The strategic review aimed to identify opportunities to improve business efficiency and to align with the
    future needs of Austin’s mining industry customers. Ultimately, the review has identified what Austin needs
    to do and where it needs to invest to be at the forefront of the industry, to grow earnings and thereby unlock
    value for its shareholders.
    Austin’s loading and hauling products are designed to meet the specific needs of its mining industry
    customers around the world. Austin’s products are designed to help mining companies increase operational
    efficiency, improve site safety and help meet their environmental and de-carbonisation targets. This is
    crucial as the mining industry works towards dramatically reducing emissions in the coming years.
    The strategic review outcomes are structured in three phases, representing short, medium and longer term
    measures to create company value across Austin’s operations in Australia, North America, Indonesia and
    South America.

    2
    ASX ANNOUNCEMENT (ASX Code: ANG)
    Phase 1
    Business consolidation and efficiency
     Austin has already rebased the indirect support structures throughout the business and enters the
    new financial year with a significantly leaner structure. By end June 2021, approximately 50% of
    the people cost reductions identified in the review were completed, with 85% due for completion by
    the end of August.
     In addition to the rapid closure of its previous head office in Brisbane, Queensland, Austin has
    consolidated its separate businesses located in Mackay into Austin’s wholly-owned subsidiary,
    AUSTBORE. The consolidation enables a stronger focus on new product delivery and support in
    Queensland and reduces the focus on general repair and maintenance services, which have not
    been delivering adequate earnings.
    Austin will continue to deliver its own product offerings to the east coast of Australia from its
    manufacturing facilities in Perth and Batam, while continuing to offer support directly in Mackay
    through its existing team.
     Austin will take a charge in its unaudited FY21 accounts from continuing operations of circa:
    o $1.9 million for the redundancy and re-organisation activities with the cash impact mainly
    falling in Q1 of FY22;
    o $6.5 million associated with net asset write-downs including goodwill totalling $3.9 million
    across Austin’s Mackay businesses, together with other fixed assets and inventory items;
    and
    o $0.9 million associated with the closure of the Brisbane facility primarily related to
    relocation packages and an onerous lease, together with costs incurred on the strategic
    review.
    These items are excluded from Austin’s underlying net profit after tax result. Collectively, the FY22
    cash impact to these items is expected to be circa $2.2 million.
    Phase 2
    Manufacturing enhancements
     Austin will develop its major manufacturing sites, commencing in Perth, Australia. Austin has
    identified significant manufacturing opportunities to reduce waste and improve production efficiency
    and product consistency through the adoption of flow production and automation. This will provide
    significant benefits for Austin’s major product ranges, in particular truck bodies, while remaining
    agile in bespoke designs and delivering unique capabilities for its customers.
     It is likely that the production system will be adopted in Batam to build bodies faster, utilise less
    factory space and improve product quality.
     Initial project investment for Perth is underway with a final investment decision by the Austin Board
    planned within the next quarter. Implementation benefits are expected partially in the FY22 year
    and to be fully in place in FY23. Investment costs will be paid for out of cashflow, sale of excess
    sites, and a reallocation of other previously planned capital investments.
     In the USA, Austin is reviewing its delivery logistics to improve overall cost competitiveness. Large
    truck bodies are difficult and expensive to move around the disparate mining centres of Canada,
    USA and Central America. Further detail around the changes being considered for North America
    will be announced when sufficient certainty has been achieved in the current review. Under
    consideration is an increasing presence in western Canada to service the oil sands region more
    effectively.

    3
    ASX ANNOUNCEMENT (ASX Code: ANG)
    Phase 3
    Putting technology and innovation at the forefront of a significantly expanded product
    range
     Out of the review, Austin has established a new customer-focused, innovation and technology
    group that reports directly to the CEO. The team will interface directly with Austin’s major customers
    and will use innovation and technology led solutions in an agile implementation environment to
    meet customers’ needs for product capability and performance. Austin has already reviewed its
    technology pipeline with some of its major customers, with new developments already underway.
    Further details on these developments will be made available at the appropriate time
     In the longer term, Austin seeks to increase its product offering, through a mix of in-house design,
    partnering with aligned businesses and M&A activity.
     Cost savings to the business generated in Phases 1 and 2 will provide funding for innovation and
    technology development, as well as enhancing earnings.
    Austin CEO and Managing Director, David Singleton said:
    “The strategic review process has provided a chance for Austin to make some big decisions about what we
    most need to focus on for organic and inorganic growth of the Company. Through this process, we will cut
    significant costs from the business while increasing output through adopting more advanced manufacturing
    techniques. Importantly, we are firmly concentrating our efforts to meet the needs of our mining customers
    into the future. Austin’s products will support our clients as they target net zero emissions, improve
    productivity and ensure ever safer operations.
    I thank the Austin Board and team for its efforts in conducting this review and we look forward to updating
    the market on the progress in executing on this strategy.”
    -ENDS-

    courtesy of Bell Direct
    ============================================================================

    DYOR

    i hold ANG

  3. 82.9k
    Posts

    Austin reports spike in orders at end of H122
    Austin Engineering Limited (ASX: ANG, ‘Austin’ or ‘the Company’) is pleased to announce that it received
    over $60 million of orders during November and December 2021, ending the first half of the financial year
    with a strong order book. At the end of November 2021 Austin’s order book was 19% higher year-on-year.
    The new product orders are for over 100 truck body’s, excavator buckets, water tanks, mine chutes in
    addition to repairs & maintenance works and were received across Austin’s operations in Asia Pacific, and
    North and South America. Delivery of new products will be to Canada, USA, Mexico, Chile, New Zealand,
    Indonesia and both the West and East Coast of Australia. Such a broad delivery profile strengthens Austin’s
    strategic expansion and growth in these markets.
    The increased sales activity comes as Austin continues to progress a number of initiatives across its
    operating regions.
    Austin’s new facility at Fort McMurray in Alberta, Western Canada commenced operations on 1 December
    2021. Four of seven truck body’s being manufactured on site have been completed and are ready for
    delivery to customers in the region. Alberta has one of the largest concentrations of heavy haul trucks in
    the world and the new facility is ideally placed to provide a much enhanced local level of customer support
    to what was previously possible.
    Austin will undertake a $450,000 expansion of its La Negra facility in Chile to accommodate an anticipated
    increased workload in the second half of FY22. The facility has been operating at high utilisation rates for
    some months now and a capacity expansion is deemed necessary. Austin expects the investment to be
    fully paid back in the second half of FY22.
    A recent expansion of truck body, final build and assembly locations in Eastern Australia and New Zealand
    has led to a competitively won new order with global gold miner OceanaGold Corporation in New Zealand
    with deliveries to commence in the second Qtr. FY22. The order for over 20 body’s uses Austin’s recently
    developed modularised truck body designs developed to overcome shipping logistics issues, with final build
    to be undertaken close to the mine site.
    In addition, Austin’s previously announced partnership with Melter in Mexico has led to further orders for a
    large drag line bucket and other equipment, further reinforcing the strength of this regional relationship
    under Austin’s “hub and spoke” strategy being rolled out globally.
    Austin CEO and Managing Director, David Singleton said:
    “We are pleased to see increasing momentum in sales activity across the board for both new products and
    repairs, and the recent uptick in orders sets Austin up for a strong sales performance in the second half of
    FY22. With a strong order book, and strong commodity prices, our facilities are operating at high levels of
    throughput as we start the new year. I am particularly pleased that our recent initiatives aimed at improving
    cost competitiveness and driving sales, have so rapidly led to an increase in orders. It gives me confidence
    in our approach and forward strategy.
    In addition, we will be launching some updated products in the current half with improved efficiency and
    safety features which, we believe, will further cement our leading position in the mining products industry

    courtesy of Bell Direct
    ============================================================================

    DYOR

    i hold ANG

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