Downturn causes debt spike
Some of the major engineering groups in Australia say they have a long list of debts owed from resource and construction companies, but they are concerned that slowing profits in the sectosr could mean they never get what is owed.
One group said this week that its clients were delaying payments as long as possible, trying to weather the storm of commodities downturn.
“We still had a significant amount of late-paying debtors at the 30th of June,” Transfield chief financial officer Tiernan O’Rourke says.
“Many customers are delaying paying for work contracted as long as possible, particularly around [financial] year end. There is strong evidence that all Australian companies are finding the cash cycle at its worst for decades.”
Transfield are certainly not the first or the only engineering firm up in arms over tardy debtors. Construction group Leighton Holdings has recently said it was owed many millions by various companies.
The downturn in construction projects has hurt engineers too, with recent statistics showing a 0.3 per cent drop. Reports say the order book has fallen 13.6 per cent to $9.5 billion, while opportunities in the pipeline have fallen 17 per cent to $25.2 billion.
The firm was forced to lay off 120 staff and attempt to sell some Middle-Eastern assets to top up the accounts.