New Contracts for Harsco Rail - Analyst Blog
May 17 2011 - 1:00PM
Zacks
Harsco Corporation (HSC) recently received a
contract from Network Rail for an estimated value of $50 million.
This is a renewal contract with an extended tenure of four
years.
Under the contract, the company’s Rail segment will continue to
provide railway switch grinding services to Network Rail in the UK
rail system. Harsco will operate and maintain a fleet of up to five
switch grinding units, performing regular rail grinding of switch
and crossing trackwork.
Rail grinding services re-profiles railhead contours enabling
enhanced rail life and smoother operation. Consequently, there was
a decline in fuel consumption, operating costs and noise. Further,
these services correct surface damage, which protects rail track
from rail fractures.
Since 1997, Harsco has been providing railway track services to
Network Rail and its predecessor Railtrack.
Harsco also secured a railway track maintenance and related
equipment contract from Saudi Arabia for $15 million. Deliveries
would be completed by the end of this year.
As per the contract, the company will support the Kingdom's new
North-South Railway system project of constructing a 2,300
kilometer rail line to connect Saudi Arabia's rich phosphate and
bauxite reserves with its processing facilities in Jubail.
Furthermore, it will facilitate a new rail route for freight and
passenger traffic.
The project will enable new opportunities for the Harsco
Infrastructure group operating in Saudi Arabia through a joint
venture partnership with Jeddah-based Al-Baroom Group.
Additionally, it will encourage new customer relationships and
provide market opportunities for Harsco Rail.
Harsco is a diversified, multinational provider of market-
leading industrial services and engineered products to a variety of
industries that are fundamental to the world’s economic growth and
progress.
The company’s Rail segment reported revenues of $63 million in
the first quarter of fiscal 2011, down 34% from the year-earlier
quarter. Operating margins of the segment decreased to 13% from
21.4% in the year-earlier quarter.
For the second quarter of fiscal 2011, management expects an
overall EPS of 34 cents-39 cents from continuing operations. The
company apprehends that EPS growth in the second quarter of fiscal
2011 will be impeded, due to the timing of shipments in the Harsco
Rail segment.
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