Monadelphous Group keeps on delivering

Engineering and construction company Monadelphous Group Ltd was one of the top performers in the total shareholder return survey, outperforming every other mature business in Western Australia.

Led by chairman John Rubino and managing director Rob Velletri, its share price has risen strongly over the past five years, peaking briefly at just over $17, and it has also delivered regular dividends to its shareholders.

Putting the two together, its total shareholder return was 149 per cent in the year to June 2007 and 2,887 per cent over the past five years, according to calculations by Aspect Huntley.

Driving the higher share price has been very strong growth in earnings, as Monadelphous has astutely exploited the construction boom in the resources sector.

The Applecross-based company this week reported a more than doubling of its net profit after tax to $60.4 million for the year to June 2007.

The 106 per cent profit jump followed increases of 76 per cent in 2005-06 and 95 per cent in 2004-05.

Monadelphous Group's growth has largely been organic, though it has also used acquisitions to boost its expansion.

This included the 2005 acquisition of Queensland-based electrical services contractor MIE, which lifted revenue 176 per cent last year.

It has also focused on winning maintenance contracts to ensure it is not overly exposed to any downturn in project construction.

Monadelphous’ latest results indicate that it has managed to achieve an increase in profit margins.

While its sales revenue increased by 81 per cent, to $963 million, net profit was up 106 per cent and its earnings per share were up 102 per cent.

The company attributed the higher margins to strong market and operational performance and continuing improvements in economies of scale.

The strength of Monadelphous’ performance was highlighted by comparison to mining and construction contractor Macmahon Holdings Ltd, which operates in a similar sector and has similar turnover.

Macmahon this week reported a 12 per cent rise in revenue to $966 million and a 22 per cent rise in underlying net profit to $33.4 million.

Its total shareholder return for the year to June was 66 per cent while over the past five years its return was 403 per cent.