Monadelphous (ASX:MND) reports it has received strong demand for maintenance services across the resources and energy sectors, driven by favourable commodity prices, high levels of production, and aging site infrastructure.
Monadelphous has secured about $945 million in new contracts and contract extensions across the resources, energy, and infrastructure sectors for the 6 months to 31 December 2022.
Since 1 July 2022, the company has been awarded about $540 million of work in the iron ore sector, with both long-term customers, such as BHP (ASX:BHP) and Rio Tinto (ASX:RIO), as well as with Fortescue Metals Group (ASX:FMG).
The company was also awarded a number of contracts in the expanding battery metals sector, including in the lithium and copper markets.
Monadelphous has recorded revenue during the period of $953 million, however this is down 10.5% on the previous corresponding period.
The Australian engineering group, which provides construction, maintenance, and industrial services to the resources, energy, and infrastructure sectors, reports its Maintenance and Industrial Services division achieved a record half-year revenue result of $676.8 million, up 13.5% on the prior corresponding period.
Monadelphous continued to build on its more recently developed customer relationship with Fortescue, being awarded a number of construction and maintenance contracts. The company’s Engineering Construction division was engaged to provide multidisciplinary construction services at the Iron Bridge Magnetite Project, an unincorporated joint venture between Fortescue’s FMG Iron Bridge and Formosa Steel IB. In addition, the Maintenance and Industrial Services division was awarded a 5-year services contract at Fortescue’s Pilbara operations, as well as being appointed to a panel providing non-process infrastructure services for a three-year period, with a one-year extension option.
Monadelphous reports although global economic growth is forecast to remain steady, commodity prices are strong and the outlook for Monadelphous’ core markets continues to be positive.
although global economic growth is forecast to remain steady, commodity prices are strong and the outlook for Monadelphous’ core markets continues to be positive
The resources sector in Australia, and in the company’s overseas locations, continues to provide a significant number of prospects for its services across a broad range of commodity markets. The Australian iron ore industry is expected to remain buoyant with capital and operating expenditures required to sustain and maximise production levels driving demand for the Monadelphous’s services.
High global demand for battery metals is driving significant investment in lithium, copper, nickel, and rare earths, and these markets, along with the gold sector, will present ongoing opportunities, not only in Australia, but also in South America, Mongolia and Papua New Guinea.
As previously forecast, the Engineering Construction division experienced lower levels of activity during the period due to a number of significant construction projects completing in the previous financial year, and the timing of the award and commencement of new projects. The division reported revenue of $277.7 million for 6 six months, down 42.1% on the prior corresponding period. High levels of tendering activity were experienced, associated with the strong pipeline of new resource development projects.
Statutory revenue, which excludes Monadelphous’ share of revenue from joint ventures, was $894.9 million.
Earnings before interest, tax, depreciation and amortisation (EBITDA) for the period was $58.2 million, delivering an EBITDA margin percentage of 6.11% for the reporting period, which is up from 5.76% for financial year ended 30 June 2022.
Net profit after tax (NPAT) was $29.1 million, down 3.1% on the prior corresponding period, generating earnings per share of $0.30.5.
Monadelphous ended the period with a robust cash balance of $190 million, representing a strong cash flow conversion rate for the 6 months of 110%.
With over 50 years of experience, Monadelphous is an Australian engineering group providing construction, maintenance and industrial services to the resources, energy and infrastructure sectors. The company has two operating divisions − Engineering Construction, providing large-scale multidisciplinary project management and construction services, and Maintenance and Industrial Services, specialising in the planning, management and execution of mechanical and electrical maintenance services, shutdowns, fixed plant maintenance services and sustaining capital works.
Monadelphous is headquartered in Perth, Western Australia, with a major office in Brisbane, Queensland, and offices, projects, facilities and workshops across Australia and in China, Mongolia, Papua New Guinea, Chile, and the Philippines.
Write to Adam Orlando at Mining.com.au
Images: Monadelphous Group Ltd
