NRW back in the black

Shares in local contractor NRW Holdings soared on news the company had returned to the black with $21.5 million in profit for the 2016 financial year.

NRW’s profit result follows last year’s $229.8 million loss, which was largely attributed to impairment expenses totalling $157.2 million.

Today's result was despit a fall in revenue from $775.9 million in FY15 to $228 million.

Earnings before interest, tax, depreciation and amortisation also returned to the black at $47.4 million.

NRW declared no dividend payout for a second consecutive year; instead it used profits to restructure debt, with the company targeting all debt to be paid off within the next 30 months.

Investors welcomed the result, with NRW shares up 53.7 per cent, or 21.5 cents, to 61.5 cents each at 11:30am.

NRW shares haven’t traded that high since November 2014.

“I am very pleased to report a recovery in the underlying financial performance of the business, achieved against the continuing challenges in the sector,” NRW managing director Julian Pemberton said.

“While opportunities have been hard fought, we managed to achieve solid growth in our forward order book to around $1 billion after securing several new contracts predominately during the second half.

“The highlights in the results include our return to profitability, strong operating cashflow and significant debt reduction.”

Mr Pemberton said securing the $1.2 billion Forrestfield-Airport Rail Link contract in a joint venture with Italian company Salini Impregilo in April was a significant milestone for the company.

NRW has a 20 per cent stake in the joint venture.

“NRW’s involvement in this world class project provides the company a pathway to significantly up skill its capabilities and reputation within the major project sector,” he said.

“This award, together with project wins for Rio Tinto at Nammuldi, the Yandi Oxbow project and a number of long term contracts awarded to the drill and blast business, has already secured $325 million of work to be delivered in the new financial year”.

NRW’s asset utilisation reached 81 per cent at the end of FY16, with overhead costs reduced by 40 per cent compared with FY15.

Looking ahead, the company expects tendering opportunities to remain competitive, but said there was scope for work opportunities in coal and gold, as well as the emerging lithium market.