In late February, Boom Logistics announced a net profit after tax of $2.9 million for the half year ended 31 December 2021, up $2.5 million compared to the previous corresponding period.
Tony Spassopoulos, Boom Logistics managing director, spoke to Cranes and Lifting magazine about the performance and his expectations for the second half of the year and beyond. He also explains the organisation’s focus on safety.
“At Boom Logistics we always think safety. We always start our meetings with a safety theme or a ‘safety share’. Safety is at the heart of everything we do at Boom. As part of our safety program, we start each day with a safety themed conversation.
“Our leadership team meets every Friday and we discuss the week, provide Covid updates, review what has happened in the business, and address safety matters.
“We then review our ‘Safe Start Monday’, which is a communication that is distributed every Monday before the teams gather for a ‘tool box’ session and discuss a topical safety issue. We are very proud of our safety record over the last few years; safety is now engrained in the business,” he said.
Spassopoulos goes on to explain how the approach to safety benefits the business and how important the commitment to a ‘safety culture’ is for all employees in the organisation.
“I think the most important benefit is the open communication generated from a safety culture,” he said.
“The leadership team, including our managers and supervisors, are constantly talking to our front line crews, the operators, and riggers about safety.
“This is a two-way communication, with our crews being able to talk to the supervisors and management team about what they are seeing on customers’ sites and we all learn from these observations.
“A second benefit is what we call a ‘lead indicator’. If you are constantly leading interaction within the organisation, the topic is front of mind with everyone. At the end of the day, we want everyone to think safety before anything else.
“Everyone in our organisation has control of the job at hand. If they believe there is a risk or a review is needed, they can stop the job and reassess and re-examine the process and the situation. They might need more data, or lift drawings, or more engineered lift plans, whatever is required for that particular job to be completed safely.
“We have found that having competent and experienced teams focused on safety helps with customer relations. Safety is front of mind with our customers and our commitment to safety provides them with a with high levels of assurance, which definitely helps with customer renewals, new customer contracts and project contracts.
“Even with this positive focus on safety we recognise there is room for improvement, and we are always striving for zero harm throughout the business,” said Spassopoulos.
In late February, Boom Logistics Limited announced a net profit after tax of $2.9 million for the half year ending 31 December 2021, up $2.5 million compared to the previous corresponding period (PCP) (first half of the financial year 2021 [1H FY21]: $0.4 million). Earnings before interest, taxes, depreciation, and amortisation was $22.5 million, up 26 per cent (1H FY21: $17.9 million), as the group benefitted from new mining maintenance shutdown works, renewable energy and infrastructure projects.
Revenue was $123.5 million, up 47 per cent (1H FY21: $84.2 million) with major projects including the SCM21 BHP Olympic Dam shutdown, Bango wind farm construction and Snowy 2.0 infrastructure tunnel work.
Operational cash flow was $23.4 million before tax, up from $14.4 million in the PCP. Net debt was $27.9 million at 31 December 2021, down from $29.4 million at 30 June 2021. Gearing at 31 December 2021 was 25 per cent, in line with guidance of between 20 to 35 per cent, which allows capacity for growth. Working capital is being carefully managed to meet the timing of major projects. At 31 December 2021, net tangible assets per share was $0.26.
Capital expenditure for the half was $9.4 million, increasing capacity for future growth through utilisation of the group’s fleet of more than 275 cranes and 80 travel towers. The group continues use of its flexible asset rental model, which allows the group to enter into operating leases on large assets to match requirements for contracted project work. Total asset utilisation for the half was 82 per cent, up from 73 per cent.
Spassopoulos goes on to discuss why Boom Logistics has been successful during the first half of the year and talks about his predictions for the second half.
“We’ve had a strong start to the 2022 financial year and there are number of reasons for this. Our core business is mining services and 50 per cent of revenue comes from this sector. This activity across the various regions has been strong,” he said.
“Even though we had challenges including Covid, border restrictions, and moving people around, we managed our way through these and we had some major blue chip customer ‘shutdowns’ occurring in the mining sector.
“An example of this was BHP SCM21 program. We have also been busy with our Central Queensland and also our Western Australian customers with shutdown activities,” he said.
“We were also active in the renewable sector and in particular wind farm construction where we had the Bango wind farm, and this will progress into the second half of FY22. We also have the Snowy Hydro 2.0 project. We’ve been on site for
a while working with the tunnel boring machines [TBMs]. There were three TBMs planned in the original scope of works but a fourth TBM is arriving now planned to come online and we will be working on this also,” said Spassopoulos.
The energy sector has also been busy forBoom Logistics. In Western Australia the business has been working on the Power Lines Plus project in the Pilbara region and this has been a successful project. It is in its first stage with two additional stages to come. Spassopoulos and his team have identified four key sectors for growth.
“We see renewables as a growth opportunity for the business. The total wind farm market construction spend is estimated at $4 billion over the next three years and so this is a strong focus for us for growth. We not only install the wind turbines with our cranes, crews, and rigging experts, we also offer the full mechanical package.
“We estimate 2000 towers will be constructed over the next three years but there are already 3,000 towers requiring maintenance and we see this as a good opportunity. Other areas we are targeting is our ongoing work in mining. We are providing support services to this sector and we see our mining customers continuing to conduct ongoing maintenance programs,” he said.
The infrastructure sector presents another growth opportunity says Spassopoulos.
“As we are all hearing, there is a $100 billion federal and state government spend planned in this sector. There is an attractive amount of work over the next three years planned in this sector.
There is an attractive amount of work over the next three years and we see our large scale equipment, our larger capacity cranes and our engineering services as being the opportunities for this sector.
“The fourth sector is the energy sector with a particular focus on the electricity infrastructure market.
“This is certainly a growing market, there’s $30 billion in construction spend being planned. We see our travel towers, our cranes, and our labour services being utilised in the energy space.
“With the renewables sector expanding there is obviously a need to get the energy into the grid hence the investment in energy infrastructure, which is a hot topic for our governments at the moment,” said Spassopoulos.
Asset utilisation is a key metric for Boom Logistics.
“In terms of asset utilisation our total fleet is running at 82 per cent and if you look at cranes specifically, they are running at circa 88 per cent. The smaller cranes in the fleet including
our range of Franna, their utilisation is above this and running in the 90 per cent range.
“There are some challenges with the delivery of cranes, with longer lead times at various factories and there are production shipping delays with all the supply chain challenges.
“At Boom Logistics we have our ‘flexible rental model’. We have excellent relationships with suppliers, particularly in Europe, and we have access to machines that we back onto contracts which we have won, or are planning to win.
“When these projects are completed, in two or three years’ time, and if we don’t think there will be further work for them, we can send the machines back.
“Our flexible rental model provides us with access to a broad range of machines and capacities including crawlers and mobiles, which will suit some of these major infrastructure projects for example,” said Spassopoulos.
New travel towers have been ordered and are on the way from Bronto Skylift.
“Again, there is a 12-month lead time to delivery on these and we will probably see them arrive mid-year and in the fleet for the 2023 financial year,” said Spassopoulos.
“It’s a long lead time because the models have been engineered and manufactured specifically for us.
“The travel towers are ideal pieces of equipment for the renewables and energy market, and we are also finding numerous applications in mining. We see the travel towers making a solid contribution to the growth of the business,” he concluded.