Profit lift for mining services stocks

Macmahon Holdings has posted strong profit growth for the year to June, adding to a string of good results for local mining services companies, including Lycopodium and NRW Holdings.

Perth-based Macmahon recorded net profit after tax of $31.3 million, up from last year’s result of a $2.1 million loss.

Revenue for the group nearly doubled to $710.3 million, with Macmahon attributing the result to the commencement of three new surface projects and two underground mining projects during the year.

In Western Australia, the company secured work at Newcrest’s Telfer operation, Dacian Gold’s Mount Morgans project and Anglogold Ashanti’s planned expansion at the Tropicana gold mine.

“We have achieved very pleasing results for FY18 and are well positioned for FY19 with our order book now at a record $5.4 billion,” chief executive Michael Finnegan said.

“Over the past 12 months, we secured significant new work and extensions in Australia, including open cut mining work at the Byerwen coal mine in Queensland and the Mount Morgans gold mine in Western Australia, while phase one of the Tropicana Long Island expansion was confirmed.

“We also commenced an underground development project at the Endeavour lead-zinc mine in New South Wales, and an exploration decline at the Tujuh Bukit copper-gold deposit in Indonesia.”

The company is also forecasting revenue of between $950 million and $1.05 billion for FY19.

“Our guidance is based on $1 billion of contracted work for FY19 and our monthly revenue is now consistent with this run-rate,” Mr Finnegan said.

“This gives us a solid platform for further increases in earnings.

“We are also optimistic about the prospect of further growth in our order book, and have an extensive pipeline of tender opportunities estimated at over $7 billion.”

The news comes as engineering firm Lycopodium reported profit of $18.1 million, about $8 million more than last year.

The strong profit result came despite a drop in revenue from $216.6 million to $194.6 million this year.

The company announced a total dividend of 30 cents, fully franked.

Shares in Lycopodium were up 6.36 per cent at $4.85 each at 3.30pm AEDT.

Belmont-based NRW said it had doubled revenue to $754.3 million, while NPAT came in at $42.2 million, a 48 per cent increase on the previous year.

The company also said it had an order book of $2.2 billion.