Monadelphous profit falls 6.3%

Engineering contractor Monadelphous Group has announced a 6.3 per cent fall in full-year profit to $146.5 million on softening activity in the mining and minerals sector.

The fall in profit flowed from a 10.9 per cent drop in revenue to $2.3 billion, after two strong financial years which delivered 80 per cent growth for the company.

“The impact of this softening was reduced by Monadelphous’ continued focus on productivity and increasing activity in the LNG and coal seam gas markets, with oil and gas customers contributing more than 40 per cent of total sales in the latest year,” the company said in a statement.

Monadelphous declared a fully franked dividend of 63 cents per share, bringing its full-year dividend to $1.23 per share.

The result includes a one-off contribution from the sale of aviation support services business Skystar Airport Services.

“The company-wide cost reduction program we started in the second half of the previous financial year achieved annualised cost savings of $53 million and is driving enhanced productivity,” Monadelphous managing director Rob Velletri said.

Monadelphous said it had $1.8 billion worth of new contracts and contract extensions, including its construction contract for $680 million of work on the Ichthys LNG project in Darwin.

“More than 70 per cent of the new contracts are in oil and gas,” Mr Velletri said.

“Our broadened exposure to the oil and gas market will continue to provide construction and maintenance opportunities over the medium to longer term as construction activity in mining and minerals slows.”

Monadelphous warned of a moderation in sales with markets tightening in the coming year.

The company’s share price rose by 4.82 per cent to $16.95 per share at 11am.