Monadelphous lifts profit to $72m

The market has welcomed a strong annual profit report and positive outlook for Monadelphous, even though the engineering contractor has warned its construction revenue will fall after a big surge in work on the Ichthys LNG project in Darwin last financial year.

Perth-based Monadelphous reported a 24 per cent rise in net profit for the year to June, driven by strong growth in the company’s engineering and construction revenue.

Monadelphous’ net profit after tax was $71.5 million, while sales revenue increased 41 per cent to $1.78 billion for the period.

The company’s engineering construction revenue was up 54.4 per cent to $949.9 million, while maintenance and industrial services revenue jumped 28.9 per cent to $841.1 million.

The group said construction revenues were strong during the period due to a surge in activity on its oil and gas projects, while demand for maintenance services strengthened across both the resources and energy sectors.

“The engineering construction division continued to perform strongly on the Ichthys project onshore LNG in Darwin, Northern Territory, which resulted in the award of a significant amount of additional work throughout the duration of the project,” the company said in a statement to the ASX.

“It experienced growth in the renewables and water sectors, securing a further four wind farm contracts and continuing to deliver on water and irrigation projects in both Australia and New Zealand.”

“The maintenance division reported a record sales revenue of $841 million for the year, up almost 29 per cent, due to the ramp-up of a number of offshore oil and gas contracts and an increase in maintenance and sustaining capital works projects.

“In addition, the division expanded its presence geographically in both Newman, WA, and Newcastle, NSW.”

Monadelphous announced a final dividend of 62 cents per share, fully franked.

The company said its outlook for 2019 was positive, although it expected a drop in construction revenue.

“The outlook for the resources and energy sector continues to improve with several major iron ore projects entering early stages of development and an increasing number of opportunities in the base metals and lithium markets,” Monadelphous said.

"However, as a result of the expected timing of this work, and the significant revenue contribution earned from the Ichthys project in the prior period, the company is forecasting lower construction revenues in 2018-19.

"Maintenance activity is forecast to increase and investment in infrastructure remains healthy."

Shares in Monadelphous were up 5.95 per cent at $15.85 each at 1.35pm AEDT.