Forge shares up on contract win

Forge Group shares have risen on news it has secured a $40 million contract, helping to repair an 80 per cent single-day nosedive in late November when it announced a $127 million profit writedown on two power stations.

Forge's market capitalisation fell by more than $300 million to about $59 million on the back of the share price plunge.

The company announced today it has secured $40 million worth of new asset management works in the North American coal sector, bringing the total contract value up to $90 million for works it has secured in the region since October.

The programs include a mix of operations, maintenance and small capital works including utility programs with new and existing clients.

“Forge Group’s strategy of generating more recurring revenue streams from asset management and maintenance works is gathering pace, as demonstrated by this announcement and the contracts that we secured in October,” Forge managing director David Simpson said.

“The majority of new asset management and maintenance works are from our operations in the US, a market that is showing encouraging signs of growth.

“North America is the world’s largest industrial maintenance market, and through the Taggart Global business that Forge Group acquired earlier in the year, we now have a strong local presence in place to capture more recurring revenue streams in the market.”

Mr Simpson said the company was looking for a better balanced revenue base from its engineering, procurement and construction, and asset management operations.

“Forge Group is also focused on the successful delivery of all the EPC contracts currently under way, as well as ensuring the group’s overall cost base is well managed,” Mr Simpson said.

Forge told the market at the beginning of October it had performance issues at Rio Tinto's West Angelas power station project in the Pilbara and the Diamantina power station in Queensland, and went into a trading halt.

Forge shares plunged $3.50 to 68 cents when it resumed trading last month and its shares hit a recent low of 47 cents per share. 

Today's announcement helped boost its share price 24.3 per cent to 66.5 cents, and settled to 66.3 cents per share at close of trade today.