Challenging markets dent NRW profit

Civil contracting and mining services firm NRW Holdings’ profit has plunged 40 per cent, with the company hit by challenging markets in the coal and iron ore sectors.

NRW said today its net profit for FY2013-14 came in at $44.2 million, down from $74.1 million in the previous financial year.

Revenue was down $251.3 million to $1.1 billion, NRW said.

The company’s mining construction division was the hardest hit, with its revenue falling from $404.5 million in FY2012-13 to $186.9 million in FY2013-14.

NRW’s civil construction division recorded an $18.3 million fall in revenue to $842.3 million, while its drill and blast arm’s earnings fell $40.5 million to $110 million.

Action Mining Services’ revenue fell from $41.8 million in FY2012-13 to $28 million in the financial year just gone.

The contractor said the reduction in activity reflected the completion of expansion programs in the iron ore sector and a challenging market environment, particularly in coal mining.

However, NRW said securing a $620 million contract for rail earthworks at the giant Roy Hill iron ore mine in the Pilbara was a pleasing result.

Despite the falling earnings and profits, NRW was able to strengthen its balance sheet position, shaving off $54.6 million from $88 million over the financial year.

“It was pleasing to report revenues of $1.1 billion for the year in line with guidance despite challenging market conditions,” NRW chief executive officer Julian Pemberton said.

“The net debt position at year end of $34 million results in a gearing ratio of 9.1 per cent, the strongest balance sheet position since listing in 2007.”

NRW also provided guidance for the current financial year, saying it expected revenue to come in between $1 billion and $1.2 billion.

Around $700 million of that revenue is already on its order book, NRW said.

NRW declared a fully franked final dividend of 5 cents per share.

The company’s share price rose by 5.77 per cent to $1.10 at 12pm.