Decmil reveals contract, project delays

Osborne Park-based Decmil Group has cited delays in the awarding of contracts and project starts in lowering its full-year revenue guidance, but predicts a stronger result in fiscal 2022.

On Friday, the engineering and construction group revised its revenue forecast to between $300 million and $320 million, down from a previous $360 million estimate.

Though, Decmil left its underlying earnings guidance unchanged, at between $6 million and $10 million.

“We have been able to maintain our EBITDA guidance because our project teams are operating very efficiently, increasing the earnings margins for work performed and because we have tightly managed corporate overhead costs,” chief executive Dickie Dique said.

“COVID-19 related delays have shifted the estimated award of several contracts, and therefore associated revenue, into FY22.

“An increase in anticipated revenue for FY22, in tandem with our strengthened order book from the recent contract wins, pivots Decmil towards a very strong FY22 and beyond.”

Decmil’s order book stands at $590 million, about $400 million of which will be recognised in FY22.

“We are in the final stages of the tender process for several major contracts, and we anticipate that key opportunities will be awarded in the first half of the next fiscal year,” Mr Dique said.

Some previously delayed contract opportunities were now beginning to materialise, with Decmil noting Rio Tinto’s Mesa J project in the Pilbara.

Decmil was awarded a $30 million contract from Rio in November last year to supply heavy and light vehicle facilities at the Mesa J site, as part of the iron ore major’s Robe Valley operations.

Those works are due to be completed by the end of the year.

Mr Dique said Decmil would continue to capitalise on a thriving infrastructure sector in Australia while increasing its operational efficiency and delivering on contracts for blue-chip government clients.

He said FY21 was a year of consolidation for the company while FY22 would be a year of growth.

Decmil had restructured its operations last year, following write-downs and a number of disputed contracts.

Its shares were down 4 per cent at 12:26pm AEST on Friday to trade at 48 cents.