The group has posted its half yearly results for 2014-15, reporting sales down 17.6% to $A1.05 billion from its recent near-record highs thanks to tighter market conditions, with net profit after tax of $60.7 million, down 23.4%.
Monadelphous managing director Rob Velletri said that despite the challenging market conditions the company had maintained a strong balance sheet, and continued to focus on productivity improvements and cost reduction while its customers were spending less money on developments, and focusing on optimising production and reducing costs.
“The mining and minerals market remains subdued on the back of low commodity prices, and the recent sharp fall in the oil price has impacted negatively on the oil and gas sector.
“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.”
Maintenance prospects remain positive in the oil and gas sector with tenders out for a number of upstream and downstream service contracts associated with several new multi-billion dollar LNG facilities moving into the operations phase.
The workforce is down 20% from its peak so far, with more sackings to come, as costs across the company are being reduced by $17 million per annum.
New contracts awarded included $160 million of structural and piping installation for three concentrators with Sino Iron at Cape Preston, near Karratha, WA; constructing the Spring Gully pipeline compression facility for APLNG at Roma, Queensland; building the Oxley Creek sewage treatment plant near Brisbane; and construction of a 24km gas pipeline from DUET’s Ashburton West facilities to a new power station near Onslow, WA.
The company also strengthened its position in new service markets, winning contracts in both water and pipelines.
Given the current workload and tight market conditions, the company expects 2014-15 full-year revenue will be around 15-20% lower than the previous year’s net profit of $146 million.