Macmahon, Perenti record steady growth

Persistent inflationary and labour pressures have not waned Macmahon and Perenti's positive outlook as the two mining contractors record earnings growth for the 2023 financial year. 

Northbridge-based mining services group Perenti recorded underlying earnings before interest, taxes, and amortisation of $552.6 million for the 2023 financial year, up 29.6 per cent from FY22.

The Mark Norwell-steered operation brought in net profit after tax of $131.8 million, a significant upkick of 57.7 per cent from the $83.6 million recorded in the prior period.

Revenue for the financial year was $2.8 billion, up 18.2 per cent from $2.4 billion in FY22 and within the group’s revised guidance range.

“Year-on-year we delivered significant revenue and earnings improvement as our growth projects continue to progress through their respective ramp-up phases,” Mr Norwell said.

“Our strategy enables each of our businesses to capitalise on and take full advantage of the improvement to macro-economic conditions, including the ‘end of COVID’ and as we saw continues strength in markets for the metals and minerals we mine on behalf of our clients.

“Although I would note that various macro-economic challenges still exist, however we are cautiously optimistic.”

In June, Perenti announced the proposed $400 million acquisition of DDH1, a Canning Vale-based drilling specialist listed on the ASX since 2021.

Perenti is forecasting FY24 revenue of between $2.8 billion and $3 billion and a EBIT(A) target range of between $260 million and $275 million.

Meanwhile, fellow mining services contractor Macmahon announced that it recorded underlying EBITDA of $308.7 million, up 6 per cent from FY22.

It recorded a similar up kick in underlying net profit after tax of $67.6 million, up 7 per cent from the previous financial year.

It brought in revenue of $1.9 billion for the 2023 financial year, recording growth of 12 per cent, after previously narrowing its guidance range from between $1.85 billion and $1.95 billion to a midway point of $1.9 billion.

In an ASX statement, Macmahon said its FY23 margins were negatively impacted by unseasonable wet weather on the east coast and the continuation of Batu Hijau phase 7, resulting in an additional $200 million in zero margin cost recovering being recognised in revenue.

Managing director Michael Finnegan said he was pleased to deliver the results in an environment of persistently high-cost inflation, labour shortages and unseasonably wet weather.

“As anticipated, an improved second half performance across our business continued to drive earnings growth, including successful preparations for the Greenbushes lithium project where the team commences on July 1,” he said.

The contractor said the global demand outlook for key minerals remained positive, notwithstanding central bank measures to continue to increase interest rates in response to persisting inflation.

“Whilst moderating, management continues to manage global inflationary pressures and a tight labour market across Australia,” the company said.

Macmahon is lowering its FY24 revenue target to between $1.7 million and $1.8 million, recognising the $200 million cost recovery, and claims $1.6 billion in revenue for FY24 has already been secured.

It's also forecasting underlying EBIT(A) between $130 million and $140 million.

At market close, Perenti’s shares were down 15.08 per cent to trade at $1.027 while Macmahon’s shares were up 3.225 per cent to 16 cents per share.