After 12 years of strong profit growth, engineering and construction contractor Monadelphous Group has implemented a wide-ranging cost reduction and restructuring program and foreshadowed plans to sell one of its subsidiaries in response to the market slowdown.
The company today reported a company record $156.3 million net profit for the year to June 30, up 24 per cent on the previous corresponding period’s underlying NPAT.
Earnings before interest, tax, depreciation and amortisation (EBITDA) were up 25.7 per cent on FY2012, to $247 million.
Monadelphous will pay a final dividend of 75 cents per share, fully franked.
The company said despite a widespread slowdown across its key markets, it entered the new financial year with $1.3 billion in new contracts and contract extensions.
It said margins were impacted last financial year by a general tightening in market conditions, as well as underperformance across several transmission pipeline projects.
Monadelphous said it had initiated a significant cost reduction program in the second half of the year, including consolidating its support structures, improving productivity in project execution, as well as reducing overheads, procurement and plant and equipment costs.
The company also flagged offloading its Skystar Airport Services business to Menzies Aviation, in a transaction that is expected to be completed by the end of September.
Managing director Rob Velletri said Monadelphous FY2013 was one of particularly intense activity.
“The latest financial year was a period of abnormal growth which reflected an unprecedented volume of construction contracts from the record level of resources and energy developments in execution phase,” Mr Velletri said.
“Monadelphous maintained its position in core markets and strengthened its position as a leading maintenance services provider in the rapidly growing oil and gas market by securing two significant new LNG services contracts.”
The company said it expected revenue levels to moderate in FY2014, and not reach the heights of FY2013 due to the pull-back of resources spending and an efficiency focus in consumer sentiment.
Monadelphous shares were down 4.7 per cent at 11:30AM, WST, trading at $17.94.
