Monadelphous tips 30% growth

Engineering and construction contractor Monadelphous Group has painted a positive outlook after tough trading conditions in recent years, with the company tipping strong revenue growth in the current financial year.

“The resources and energy markets appear to have turned a corner with more favourable conditions anticipated,” managing director Rob Velletri told shareholders at the company’s annual meeting today.

He said the company had experienced a good start to the year, with sales revenue to date better than anticipated.

“The high volumes of contracts secured in the past year or so, together with a spike in construction activity at the Ichthys project and an increase in demand for our maintenance services are expected to result in half year revenue growth exceeding 30 per cent,” he said.

“While sales revenue for the full year is expected to result in solid year on year growth, revenue is expected to moderate in the second half.”

Mr Velletri said margins were expected to continue to moderate as the business portfolio became more diversified.

He told shareholders that increasing levels of sustaining and brownfields capital expenditure would provide a solid level of construction opportunities over the next few years.

The outlook for the maintenance division was also positive, with oil and gas services revenues expected to increase as new LNG projects are commissioned and production ramped up.

“The ageing of assets in the resources sector is also likely to drive increasing maintenance and support activity levels,” Mr Velletri said.

Another area of expected growth was infrastructure projects in the water, irrigation and renewable energy sectors as a result of the high volume of new contracts secured this year.

The growth in the Monadelphous business has been reflected in staff numbers, which have jumped to 6,164 at June 30, up from 4,438 one year earlier.

Mr Velletri said the company’s strong balance sheet provided substantial capacity to invest in new business opportunities, particularly in infrastructure, where it would continue to pursue potential acquisitions.

The company’s share price was up 6.8 per cent to close at $19.05 today.

That is the highest it has traded since 2013, and represented a tripling in its share price from its lows at the end of 2015.