Monadelphous profit up 2% to $32.1m

Applecross-based engineering company, Monadelphous Group Ltd, has announced a record after tax profit of $32.1 million for the half year ended 31 December 2007, up 2 per cent on the previous corresponding period.

The result is 10 per cent higher than the $28.9 million profit achieved in the six months to June 2007.

Latest EBITDA was up 5 per cent to $51.4 million, buoyed by a continuing improvement in margins, reflecting strong operational performance and the high value of contracts completed during the period.

Earnings per share was 38.6 cents, in line with the previous corresponding period. An interim dividend of 29 cents per share fully franked was declared, an increase of 32 per cent.

The first half of 2006/07 was hallmarked by an unprecedented surge in revenue growth, with a string of major contracts having been secured.

While sales revenue for the reporting period was $460 million, down 8 per cent, second half 2007/08 sales revenue is expected to strengthen due to a number of newly secured contracts coming on-line.

As forecast in Monadelphous' annual results announcement in August last year, construction revenue softened in the first half of 2007/08 with the Engineering Construction division recording sales revenues of $265 million, a decrease of 25 per cent.

Monadelphous said this resulted from the predicted ramping down of some of those previous major projects, together with timing affects from delays on new projects coming to market.

Meanwhile, the Maintenance and Industrial Services division was the standout performer, delivering record sales revenue, up 21 per cent to $160 million.

Monadelphous said a highlight of the interim reporting period was a high level of contract wins, with $500 million of new projects secured - with the company confident of a number of additional large contracts being awarded in the coming months.

Despite the number of contract wins, delays in the timing of some of these projects coming on-line means that full year 2007/08 revenues will be similar to the last financial year. Margins are expected to show overall improvement for the full year.

Monadelphous Managing Director Rob Velletri said a highlight of the interim reporting period was the achievement of major inroads with its strategy to grow sales revenue in the oil and gas sector, with over $200 million in both new construction and services contracts won in this market.

"Monadelphous' strengthening position in the oil and gas sector will provide the opportunity to take advantage of the large number of multi billion dollar LNG projects planned for construction in Australia to support the company's sustainable organic growth," Mr Velletri said.

To increase workforce capacity and better meet the demands of customers, the company has announced three new key strategies including its first significant venture overseas, a supply office in Beijing.

The move is aimed at establishing ties with Chinese engineering companies to source fabricated steel products and
provide specialist engineering services for projects in Australia.

Coupled with the China strategy, the company will maximise offshore fabrication and assembly, including increasing the modularisation of components, in order to accelerate project delivery and maximise the productivity of the Australian workforce.

Monadelphous has also formed a ten year strategic partnership with the University of Western Australia to establish an innovative engineering education and training facility - the Monadelphous Integrated Learning Centre- to produce more 'job-ready' graduates.

Monadelphous shares gained 8 cents, or 7 per cent, to close at $11.37 each today.