Monadelphous half-year profit up 10%

Engineering contractor Monadelphous Group has posted a record half-year net profit of $87.1 million, with cost-cutting efforts offsetting softer revenue.

The company's sales revenue for the six months to December 2013 fell slightly to $1.27 billion as the resources market continued to tighten.

This translated to a 3.1 per cent drop in half-year earnings before interest, tax, depreciation and amortisation, which came in at $121.4 million.

However Monadelpous said it had achieved annualised savings of $34 million to date through a company-wide cost reduction program.

The size of the contractor's workforce has fallen more than 25 per cent on a like-for-like basis from 12 months earlier when employee numbers were near peak levels.

The company has also reviewed project delivery methods, consolidated support and services structures, and rationalised its plant and equipment fleet.

Monadelphous has previously forecast a 10 per cent decline in sales revenue for the 2014 calendar year after an abnormal revenue surge in the past two years.

Despite this, managing director Rob Velletri said the company was well placed to compete for tenders, particularly in the oil and gas sector. 

“We have continued to secure new work with approximately $600 million in new contracts and extensions in the first half and a further $100 million subsequent to the reporting period, with additional awards expected in the coming months,” he said.

“While mining and minerals markets have softened, bidding activity in the oil and gas market remains high and the company is in a strong position to secure new contracts in both upstream and downstream LNG developments.”

The engineering group most recently won a $100 million contract for the construction of a new $178 million gas pipeline to Fortescue Metals Group's Pilbara iron ore operations.

Monadelphous shares were trading 7.6 per cent higher at $16.78 at 10:00am WST.