Monadelphous posts profit crash

Monadelphous has been hit by the slowdown in mining, posting a 23 per cent decrease in net profit.

In the six months to December, the mine services group said its net profit after tax came in at $60.7 million, down 23.4 per cent on an underlying basis, compared with the previous corresponding period.

Sales revenue for the period was $1,052 million, down 17.6 per cent.

The company’s Engineering Construction division, which provides large-scale, multidisciplinary project management and construction services, recorded sales revenue of $730 million, down 24.0 per cent when compared to the previous corresponding period, largely impacted by the challenging conditions in the mining and minerals market.

The Maintenance and Industrial Services division, which specialises in the planning, management and execution of multidisciplinary maintenance services, sustaining capital projects and shutdowns, recorded sales revenue of $322.9 million for the period, a 1.8 per cent increase on the previous corresponding period.

The company’s total workforce at 31 December 2014 was 4,520, down approximately 20 per cent on 12 months earlier.

Monadelphous said the reduction was in line with slowing construction activity, with the company to focus on the further reduction of costs to protect margins and improve sustainability.

Given the current workload and tight market conditions, sales revenue is continuing to moderate and full-year revenue is anticipated to be around 15 to 20 per cent lower than 2013/14.

Monadelphous Managing Director Rob Velletri said the mining and minerals market remains subdued on the back of low commodity prices.

“While opportunities for new major construction contracts have reduced, tendering continues on a number of iron ore, oil and gas and infrastructure projects and the company has been awarded preferred contractor status on new construction work valued at approximately $150 million,” Velletri said.

“Maintenance prospects remain positive in the oil and gas sector. We are currently tendering for a number of upstream and downstream service contracts associated with several new multi-billion dollar LNG facilities moving into the operations phase.”

The company has declared an interim dividend of 46 cents per share fully franked to be paid to shareholders on the 2nd of April.

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