First published in Cleantech magazine, November/December 2009. Copyright Cleantech Investor 2009
By John O'Brien, Australian CleanTech
The Crane Group is a leading manufacturer and distributor of non-ferrous metal products and plastic pipeline systems and a major distributor of plumbing and electrical supplies in Australia and New Zealand. Whilst the company is not a dedicated water industry supplier, it sells a large proportion of products to this sector and, as such, is included in the ACT Australian Cleantech Index.
The Crane Group can trace its history back to the 1867 formation of GE Crane & Son in Sydney: it listed on the ASX in 1949. The largest growth period for the company occurred during the 1990s with a series of acquisitions. This has continued through to recent acquisitions including a Perth-based polyethylene pipe producer, a Northern Territory plumbing supplies distribution chain and a New Zealand pipe and irrigation producer.
The company differentiates itself from most of its competitors by having both manufacturing and retail distribution operations. Whilst this can sometimes lead companies into being a master of no trade, the Crane Group has kept these divisions separate and simply retained supply chain margins.
The company’s customer base includes plumbing, industrial, building, mining, electrical, telecommunication, government and rural industries. It also exports non-ferrous metal products to over 50 countries throughout the world. The main brands are Tradelink and Iplex, which together account for 75% of the company’s sales.
Over the past year the Crane Group has entered the fast growing coal seam methane (CSM) market, which appears to present significant growth opportunities. The extracted CSM will feed liquefied natural gas plants that will export the gas to Asian markets. To extract CSM requires the water to be first pumped out of the ground, releasing the methane absorbed into the coal. Large scale water piping and infrastructure is required to enable this process and the Crane Group appears to be well positioned to benefit.
The company raised A$40 million of equity in an institutional placement in March 2009 at a price of A$7.50. A further A$22.8 million was raised in May 2009 through a Share Purchase Plan at the same price. This capital injection reduced the company’s gearing to 25% and means that no further refinancing will be required until April 2011.
At the end of September 2009, the Crane Group’s share price was A$11.10. Following a profit warning at the company’s AGM in late October, the share price plummeted to A$9.00,- down from its peak share price of nearly A$17.50 in July 2007 but up from its low of below A$7.00 in February of this year - giving a market capitalisation of A$699 million.
