Monadelphous Group has flagged softer revenue levels in the second half of the 2014 financial year but says its final revenue figures will be dependent on a number of major tenders still to be awarded.
Monadelphous Group has flagged softer revenue levels in the second half of the 2014 financial year but says its final revenue figures will be dependent on a number of major tenders still to be awarded.
The company delivered its 12th consecutive year of earnings growth in the 2013 financial year, notching up a record $153.6 million net profit after tax.
Monadelphous managing director Rob Velletri told shareholders at the company's annual general meeting in Perth today that, while the company was unlikely to deliver another year of revenue growth in FY14, it remained well-placed to capitalise on strong activity in the oil and gas sector.
"After an abnormal surge in revenue in the past two years, 2013-14 will be a year of consolidation with revenue levels moderating and not expected to reach those achieved in the previous year," Mr Velletri said.
"Prospects from committed and planned resource developments in the iron ore and oil and gas sectors will continue to provide construction opportunities for Monadelphous in the current financial year and beyond.
"In particular, the large volume of committed LNG projects moving into the mechanical and electrical phase of construction will provide significant construction opportunities over the next few years."
He said the company had begun the year with a solid workload and its revenue levels in the first half of FY14 were expected to be similar to the previous corresponding period.
However, revenue levels were expected to soften in the second half of the financial year as a number of projects reach completion.
"The level of bidding activity remains high with a number of significant tenders still to be awarded," Mr Velletri said.
"Construction revenue flows will be dependent on the size and timing of new contract decisions, some of which are anticipated in the coming months."
He said the company had secured around $500 million in new contracts and contract extensions since the start of the 2014 financial year.
These include a $235 million contract at Rio Tinto's Cape Lampbert port near Dampier, a $150 million contract extension for works at Chevron's Gorgon LNG project, and a contract of undisclosed value for construction of the Wheatstone Ashburton West pipeline for DBP Development Group.
Projects in Western Australia continue to provide the lion's share of the company's revenue take followed by projects in Queensland, with overseas revenues making up around 5 per cent of the annual figure.
Monadelphous flagged in its FY13 annual report earlier this year that it would turn its attention to cost-cutting as the market slowdown placed pressure on margins.
Mr Velletri said the company's cost reductions had already started to have a positive impact on productivity, with overall reduction strategies to date delivering savings in overheads of about $15 million per annum.
Monadelphous shares were 0.4 per cent lower at $17.94 at 11:23am WST.
