NRW strong earnings but no dividend

Mining contractor NRW Holdings has recorded strong growth in underlying earnings for the half year, but has decided against paying a dividend to ensure debt is fully serviced.

Revenue for the period was $345.3 million, nearly double the $176.6 million from the previous year, while profit increased from $11.9 million to $15.3 million this year.

The company acquired east coast contractor Golding Group for $85 million in August last year, and NRW chief executive Jules Pemberton attributed the company’s results to the purchase.

“The acquisition of Golding has been an outstanding success and has largely contributed to the significant increase in revenue and earnings compared to the six months to December 2016,” Mr Pemberton said

“The business continues to meet or exceed our expectations and has secured new contracts and contract extensions across all of its businesses.”

Underlying earnings before interest, taxes, depreciation and amortisation was $40.3 million, up 38 per cent on the previous year.

Despite the positive half-year results, the company said it would not be paying a dividend.

“The acquisition of Golding was funded from new debt, new equity and cash reserves,” NRW said.

“The directors have concluded that the business should retain current cash balances to ensure debt is fully serviced, to provide sufficient liquidity to meet existing business commitments and to support opportunities particularly new capital equipment to support new work as they arise.”

Mr Pemberton said the company had a solid order book for the second half of the year.

“The order book of $1.6 billion includes approximately $360 million of work scheduled for delivery in the second half of the financial year,” he said.

Shares in NRW finished down 1.25 per cent at $1.58 today.