Perenti Global said it was on track to meet its earnings guidance for the full financial year despite problems in its African business denting first-half results.
Perenti Global said it was on track to meet its earnings guidance for the full financial year despite problems in its African business denting first-half results.
The group reported a solid first half, including a 5.3 per cent rise in revenue to $1 billion for the six months to December 31.
Its shares rose by 4 per cent on the news to trade at $1.46, as at 1:15pm AEDT.
Perenti reported underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $222 million for the first-half of FY20, representing a 10.6 per cent increase on the prior year.
Meanwhile, underlying net profit was down 7 per cent to $60.1 million, which Perenti said was primarily due to its normalised taxation expense.
The group said while it had achieved strong performance in both its underground and surface mining divisions in Australia, this was offset by underperformance from surface mining in Africa, through its African Mining Services (AMS) business.
Late last year, Perenti demobilised its AMS workforce and ceased all operations in West African nation Burkina Faso, following an ambush on its employees in November that resulted in 19 fatalities and 26 injuries.
The group ended its contracts with SEMAFO and Nordgold, both of which were operating gold mines in northern Burkina Faso.
Perenti managing director Mark Norwell said initiatives to transform the group's AMS operations and a strategic review of the African business were both under way.
He said despite challenges faced with AMS, group underlying earnings remained strong.
“Perenti’s underground mining business, across Australia and Africa, performed exceptionally well, with earnings growing by more than one-third over the prior corresponding period as we successfully integrated Barminco into the Perenti group,” Mr Norwell said.
He noted the group’s Ausdrill surface mining business in Australia had performed in line with expectations.
Perenti has declared a fully franked interim dividend of 3.5 cents per share.
It had $5.7 billion of work in hand at December 31, with more than $750 million in new and extended contracts secured since July.
Mr Norwell said this was required to deliver the group’s most recent FY20 guidance of between $115 million and $120 million.
Just this year, its underground and surface mining divisions secured more than $350 million worth of work, including $200 million awarded to underground miner Barminco (acquired by Perenti in 2018).
Earlier this month, Perenti said it was considering the purchase of Downer EDI's mining services business, but dismissed reports it had offered to pay $700 million.
“Downer’s mining services division fits within our assessment criteria and this process is ongoing, however we will only proceed with a transaction if we can agree terms that represent value for Perenti shareholders,” Mr Norwell said today.
He noted the group had a pipeline of $7 billion in potential work across more than 34 projects, which he expects will be awarded over the next 36 months.