Wednesday, July 13, 2016

News: Bradken hit by global mining downturn

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Australian multinational company, Bradken, is selling off its loss making European business operations following a "challenging and demanding" period of trading caused by a downturn in commodity prices and a forced change in behaviour of mining companies.

The heavy engineering company is headquartered in New South Wales and employed over 6,000 people globally, operating from manufacturing and service facilities throughout the world. It is a manufacturer and supplier of differentiated capital and consumable products to the mining, transport, general industrial and contract manufacturing markets.

Having purchased the historic Scunthorpe foundry when it acquired Firth Rixson Castings in a £16m deal in 2006, Bradken produced large iron and steel wear resistant components to the power, cement, pumps, mining, general engineering, mineral processing and quarrying industries.

In 2013, Bradken took on a refurbished site at Dodds Close at Templeborough in order to combine its office and warehouse facilities into one 12,000 sq ft building.

Now the company is progressing plans for the divestment of European business including its Darlaston and Scunthorpe manufacturing facilities in the UK. The Rotherham base, the regional head office for Bradken Europe, is now being advertised for new owners and occupiers.

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Around 20 sites have been closed or reconfigured as Bradken moves work from higher cost to lower cost foundries. It has recently acquired a large foundry in India.

Bradken posted a net loss after tax of AUS$168.1m for the six months to December 2015 and this did not include restructuring costs of $17.9m before tax related to the manufacturing reorganisation and restructuring of the overhead cost base. It also reported a net debt of $393m.

The firm believes that the exit of loss making European operations will positively impact EBITDA (earnings before taxes) by $3 million per year.

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Phil Arnall, acting managing director, at Bradken, said in February: "It has been a trying first half, however the company remains focused on its strategic intent of generating surplus cash to pay down its debt. We have been doing this in a planned way and it is bearing fruit. During the period, cash costs were reduced a further 8% to $78m and we have closed or announced the closure of several foundries and plans are underway to migrate products from these locations to lower cost facilities.

"There is a way to go in this exercise, however clear plans are in place and the company can see a further reduction of $8m per half in cash overheads progressively over the next 12 months, together with operating cost improvement from the foundry rationalisation initiative."

Bradken website

Images: Bradken

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