Decmil profit slides 5%

Engineering and construction contractor Decmil Group has posted a 4.9 per cent fall in first-half profit to $24.3 million as a result of lower construction margins in the tough market.

But revenue was up 48 per cent to $389.8 million for the six months to December, with ongoing work on contracts with the Department of Immigration and Border Protection, Roy Hill Holdings, QGC and Rio Tinto attributing to the result.

“Despite a challenging environment for resource sector-related construction, Decmil has continued to deliver on its portfolio of projects for the DIBP, Roy Hill and Rio Tinto and build on these relationships,” chief executive Scott Criddle said.

“We have also won work for new clients and now moved into the operational phase of CSG through mechanical services we provide for QGC and Origin.”

Revenue within the company’s construction and engineering division grew by 54.2 per cent over the period to $357.2 million; a result the company said was pleasing given the challenging market conditions in the iron ore and liquefied natural gas construction sectors.

Mr Criddle said the company’s Homeground accommodation village in Gladstone was also a significant contributor to Decmil’s revenue result, generating revenue of $31.6 million.

Decmil’s cash flow fell slightly to $58.4 million, with the company also announcing it will pay shareholders an interim dividend of 4.5 cents per share, fully franked.

“We expect to continue to see challenges for contractors in the natural resources sector with margins reducing following the construction boom of recent years,” Mr Criddle said.

“However, Decmil has continued to evolve its client base and capabilities and will seek construction and engineering work in new markets where there is opportunity.

“We are also evolving the engineering services we provide to the operational phase of the major resource projects including a variety of mechanical maintenance and logistical services.” 

Shares in Decmil were 1.3 per cent lower at $1.50 at 11:15am.