Earnings Shorts: Monadelphous, Tassal, Beacon Lighting, Asaleo Care

Engineering company Monadelphous Group has slashed its dividend after a 29% slump in net profit for the year to June.

The Perth-based company yesterday reported that net earnings fell to $57.4 million on an underlying after-tax basis.

Total dividend for the year has been cut to 48 cents a share from 62 cents with a final of 23 cents a share, down from 32 cents for the final for 2017-18.

Total payout for the year is 90% of after-tax earnings, which is a high rate and indicates how desperate the company was to keep faith with shareholders.

Revenue fell 15% to $1,479 billion in what was a tough year, even though there are obvious signs of rising investment in the resources sector in WA and other parts of the country.

Directors said the result reflects significant growth in its Maintenance and Industrial Services division and in its water and renewable energy businesses, as well as the reduction in resources construction activity levels which were foreshadowed at the end of the previous year.

The Maintenance and Industrial Services division achieved a record annual revenue performance of $998.4 million, up 19% on the prior year, due to increased activity levels in iron ore and offshore oil and gas markets, and strengthened demand for its services more broadly.

Monadelphous said it has secured $1.35 billion of new contracts and extensions since July 1, 2018, including over $500 million of resources construction contracts, reflecting “renewed confidence in the sector.”

“Major construction contracts were secured in Western Australia at BHP’s South Flank Project and as recently announced, Rio Tinto’s West Angelas Project in the Pilbara and Albemarle Lithium’s new Kemerton lithium hydroxide plant.

Monadelphous Managing Director Rob Velletri said the resources and energy sector in Australia is expected to provide a solid pipeline of opportunities over the coming years.

“We have been awarded a significant number of new major construction and maintenance contracts since the beginning of the 2019 calendar year, and with our strong reputation and broad service offering, we are in a good position to continue to capitalise on strengthening market conditions.”

Monadelphous said it ended the year with a cash balance of $164 million. “Cash reserves were impacted by increased working capital requirements across the business, and a significant level of employee entitlement payouts on large, multi-year projects which demobilised during the year,” directors said.

The shares eased 0.6% to $17.85 at the close.

Now it’s the raw prawn – in Northern Queensland for Tasmanian salmon farmer Tassal.

The company revealed its plans for the major diversification, with yesterday’s earnings result, and a capital raising to pay for the new adventure.

Tassal managed a 2% lift in 2018-19 full-year profit to $58.4 million and put its shares into a trading halt to allow for the raising of $133 million to support the purchase of the Exmoor Station property and expand its Proserpine operations, where it currently has 190 hectares of prawn ponds.

Tassal revealed a $108 million fully underwritten placement at $4.40 per share, a 6.8% discount to Tassal’s last closing price of $4.72. As well Tassal will also be conducting a $25 million non-underwritten share purchase plan with small shareholders.

The shares were halted at Monday’s close of $4.72.

To help sell the deal Tassal has revealed big plans for prawns.

Tassal says it wants to increase potential prawn production to about 6,000 tonnes a year by 2021-22 – pending state and federal government approvals – and has ambitions for a long-term annual target of 20,000 tonnes.

CEO Mark Ryan said Tassal’s belief in its prawn operations had only increased since its 2018 acquisition of Fortune Group’s prawn assets in northern NSW and Queensland.

“We have increased confidence in our ability to leverage our salmon know how to increase prawn consumption per capita, introduce product innovations and increase yield from improved aquaculture practices,” Mr Ryan said yesterday.

The small profit lift for 2018-19 came off the back of a much stronger 15.7% rise in revenue to $560.8 million, including a 19.9% growth from salmon to $474 million. Tassal’s salmon harvest was up 7.0% to 33,036 head on, gutted tonnes (HOG), while total sales volumes rose 10.3% to 33,856 HOG tonnes.

Tassal will pay a partially franked 9.0 cent final dividend, compared with a fully franked 8.0 cents a year ago. That makes a total for the year of 18 cents a share, up from 16 cents in 2017-18.

Listed lighting retailer Beacon Lighting saw its net profit after tax for the year to June 30 drop 17.2% due to the downturn in new home and apartment builds and weak home renovations growth.

While revenue edged up 2.5% cent to $241.8 million, like-for-like sales took a hit for the first time since 2015, dropping 2.3% due to a “challenging” second half (as the company warned it would earlier in the year).

Beacon blamed the downturn on weak housing prices and churn rates, along with weak consumer confidence and the federal election.

The weaker Australian dollar against theUS dollar also rattled the retailer, which purchases the majority of its goods in USD. Like fellow homegoods retailer Nick Scali, Beacon said the uptick in consumer confidence following numerous rate cuts and an income tax cut had “provided more optimism” for the retailer moving into 2020, but noted negative comparative sales trends had continued through July.

The company will pay a total dividend of 4.55 cents a share down from 5 cents the year before with a final of 2 cents a share (2.5 cents previously)

The shares were down 5% at 94 cents at one stage but recovered to close up 2% at $1.02. Light at the end of the tunnel?

Asaleo Care has revealed a small return to profit for the six months to June 30 as the tissue and hygiene products manufacturer rediscovered its growth mojo in a modest fashion.

The company said yesterday net profit for the six months to June 30 totalled $7.3 million.

That compares to a 2018 June half loss of $101.5 million after the company behind the Sorbent and Libra brands was forced to hack into asset values as sales and margins came under pressure, forcing some of its businesses to be sold off.

Another small positive for the company was a 2.2% rise in underlying revenue to $202 million.

Chief executive Sid Takla said the results were in line with expectations and the company, which had benefited from the sale of the Consumer Tissue Australia business in 2018.

There’s no interim dividend.

The shares closed up 1.5% at $1.015.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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