Shares in Perth-based engineering company, Monadelphous Group Ltd rose more than 5% yesterday despite the company cutting interim dividend by 12% for the half-year to the end of December.
The shares closed up 5.5% at $17.28 after directors revealed a 7.4% fall in net after-tax earnings to $28.5 million. That was on a small, 2.6% rise in revenue for the company and its joint ventures to $852 million.
With the slide in earnings, the interim payout was set at 22 cents a share (or just over $20 million) compared with 25 cents a share for the December 2018 half year and 30 cents a share for the six months to December 2017.
Directors said the result “was impacted by a lower revenue contribution from construction work, and an increase in the Company’s depreciation and financing charges resulting from its plant and equipment fleet renewal process over recent years.
“The result reflects a strong performance from the Company’s Maintenance and Industrial Services division, which achieved a record half-year revenue of $584.5 million, up 16 percent on the prior corresponding period,” directors said.
The company said its forward workload continued to strengthen securing $850 million of new contracts and contract extensions since the beginning of the financial year.
“Major construction contracts were secured at Rio Tinto’s West Angelas Project and at Albemarle Lithium’s Kemerton lithium hydroxide plant. Mondium, the Company’s EPC joint venture with Lycopodium, continued to establish itself as a preferred and trusted provider of EPC services with the strategically important award in early 2020 of a $400 million contract with Rio Tinto at its Western Turner Syncline Phase 2 project.
“In the Pilbara, Monadelphous was awarded a five-year maintenance and shutdown services contract with Rio Tinto at its iron ore operations and strengthened its presence in the rail sector with the award of a long-term contract for the provision of maintenance services to Rio Tinto on its iron ore rail network.
Monadelphous CEO Rob Velletri said favourable market conditions in the resources sector were expected to provide a solid pipeline of opportunities for both construction and maintenance services.
“Renewed confidence in the resources sector and our proven track record of successfully delivering large-scale multidisciplinary construction projects and maintenance services culminated in the award of a number of major contracts during the period, positioning us well for growth,” he said in yesterday’s statement.