The mining boom has propelled engineering firm Monadelphous’s earnings to record levels as it posted a 26 per cent rise in first half profit.
The company won $1.4 billion in new contracts during the six months to December 31 and said a healthy pipeline of projects in iron ore, coal and liquefied natural gas (LNG) projects would drive more revenue growth.
Lucrative new contracts were regularly announced to the ASX last year and since December 31, the company has announced another $180 million in contracts including installing a water supply for Rio Tinto’s iron ore operations and pipelines for Chevron’s Gorgon LNG project.
In the first half it won its first marine construction contract, a $330 million joint venture to build the Wiggins Island coal export terminal in Queensland.
While Monadelphous is involved in civil infrastructure projects, such as building water treatment plants, its fortunes are linked to its construction work around the minerals and energy industries.
Monadelphous forecast that it would achieve strong sales revenue growth for the full year similar to the first half, due to historically high levels of large resources projects being executed in Australia and a healthy list of projects in the planning stages.
Monadelphous reported a net profit of $57.5 million for the six months to the end of December, up from $45.5 million in the previous corresponding period.
Sales revenue in the six months to December was $879.5 million, up 26 per cent from $700.1 million in the previous corresponding period.
City Index chief market analyst Peter Esho said the best part of Tuesday strong results was the confidence the company had going into 2013.
While blue-chip resources stocks such as Rio Tinto and Woodside were down almost 30 per cent in 2011, companies that provide services to the resources sector including Monadelphous and NRW Holdings enjoyed strong gains.
“They are talking about a very strong (projects) pipeline, you could see a lot of large components of that pipeline being announced in 2013-14, which will make their earnings profile quite healthy,” Mr Esho told AAP.
“For now there’s enough work and they have an ability to turn that work into very healthy profits.”
The company’s shares were up 71 cents at $23.86 on Tuesday on heavy volumes.
Monadelphous on Tuesday said its record net profit and revenue in the six months to December 31 was due to strong growth in sales in its maintenance and industrial services, and infrastructure divisions.
The company declared a fully-franked interim dividend of 50 cents per share, up from 40 cents for the same period in the previous year.
