Local contractors’ positive spin

LOCAL engineering and resources services contractors have used annual meeting season to highlight the brightening outlook for their sector, despite major ongoing challenges.

Sector leader Monadelphous Group was typical of the growing confidence in the sector, noting market conditions had strengthened significantly during the past few months, largely due to renewed activity in the coal, iron ore and LNG sectors.

Monadelphous was among a handful of engineering groups to deliver significantly better earnings in 2009-10, posting a 12 per cent lift in net earnings to $83.2 million, and has already signed $400 million in new construction and services contracts this financial year.

Chairman John Rubino told shareholders this week much of that growth could be attributed to the company’s growing presence in the energy sector, which accounted for 30 per cent of group revenue last financial year.

Managing director Rob Velletri said opportunities in the energy sector continued to grow as major LNG developments in Western Australia and Queensland moved towards the execution phase.

He said the infrastructure sector was likely to remain buoyant for some time, creating strong opportunities for Monadelphous’ transmission pipelines and water businesses.

Decmil Group, which is also strongly leveraged to the local oil and gas sector, was another contractor to report much improved earnings last financial year, booking a 55 per cent lift in earnings to $18.9 million.

Managing director Scott Criddle told shareholders this week that, in light of major investments announced by some of its blue chip customers, and its ongoing diversification into the infrastructure sector, Decmil once more expected to deliver “double digit growth” in net profits this financial year.

Furthermore, Decmil’s strong balance sheet left it well placed to pursue strategic acquisitions as opportunities arose.

North west focused contractor NRW Holdings was another to highlight the improving outlook, despite lingering uncertainty related to the proposed mining tax.

Managing director Julian Pemberton said secured revenue for 2011 had reached 89 per cent of NRW’s minimum target, keeping it on track to achieve a 15 per cent lift in revenue to over $700 million this financial year.