Monadelphous bullish on project pipeline

The longstanding Western Australian contractor books a higher profit while anticipating projects in commodities, both old and new, will continue to provide a significant pipeline of prospects.

Monadelphous on Tuesday reported an uptick in its net profit after tax which was lifted from $52.2 million in the previous year to $53.5 million. 

The contractor continued to rack up work with iron ore majors BHP, Rio Tinto and Fortescue Metals Group during the year, while also broaching into the lithium furore by winning two long-term maintenance services contracts with Albemarle as well as a major construction contract on its Kemerton lithium hydroxide plant.

Monadelphous' reported strong demand for its maintenance services division, particularly in oil and gas, contributing to an 11.4 per cent uplift in the division's revenue stream.

Work on the engineering front suffered during FY23 amid what the company said had been a 'temporary slowing in construction activity'. Revenue overall softened 5.2 per cent to $1.83 billion. 

Looking ahead, the company was optimistic about opportunities presented by the energy transition and in an expected uptick in mining and processing activity in commodities such as lithium, nickel, copper and rare earths. 

Its outlook also referenced new gas construction projects, anticipating this would likely yield maintenance and decommissioning services in the future. 

Monadelphous managing director Zoran Bebic said resources and energy sectors would provide a 'significant pipeline of projects.'

“We expect longer-term demand to remain strong across most commodity markets, with high levels of mining and mineral processing development activity anticipated, several new gas construction projects in the development pipeline and maintenance activity levels in the resources and energy sectors forecast to grow," he said. 

In Western Australia, the contractor continued to grapple with higher labour costs and shortages. 

"With heightened demand, capacity will remain constrained and we will continue to take a strategic and targeted approach to new work.”

Its global workforce was reduced significantly to 5,674 after axing the operations of Chile-based construction and maintenance division Buildtek.

Monadelphous shares closed 1.66 per cent higher on Tuesday ending the session at $13.48.