Monadelphous profit jumps

Mining contractor Monadelphous (MND) says the surge in contracts that helped it to a 14% increase in full year net profit is unlikely to continue in 2014 and that it would focus on cost reduction and productivity improvements to protect margins.

An ‘abnormal’ period of growth pushed the company’s annual profit to $156.31 million from $137.34 million in 2012-13. Underlying NPAT was up 25%.

The company reported a 56% rise in revenue in its engineering construction division, which booked $700 million in new contracts, primarily in iron ore, and 50% growth its infrastructure division, while maintenance and industrial services remained flat. 

Total revenue grew 37.8% to $2.61 billion, greater than the 35% growth the company was anticipating for the period.

In a sign, however, of slowing mining investment (see Inside the mining services disaster), Monadelphous said that its operating cash flow was being affected by miners lengthening contracts and increasing their payment terms.

Writing to shareholders, Monadelphous Chairman John Rubino said, “Customer sentiment has changed from an aggressive growth focus to an efficiency focus as commodity prices have normalised in a rising cost environment.

With market conditions softening and after an abnormal surge in revenue in the past two years, 2013/14 will be a year of consolidation with revenue levels moderating and not expected to reach those achieved in the previous year.”

The company declared a final dividend to 75 cents per share, for a  full year distribution of 137 cents fully franked – a 9.6% increase on the previous year.