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Summary
- The engineering services market play a significant role in the growth, as well as development of an economy as it assists in building infrastructure and job
- Australian engineering group, Monadelphous Group has been sweeping the market with strong future outlook, continuous drive towards its strategic initiatives, albeit with a couple of hiccups.
- On 18 August 2020, Monadelphous’s share price zoomed up by 935%. The soared share price was buoyed by the unveiling of its FY20 results ended 30 June 2020, recording AU$1.65 billion of total revenue, AU$36.5 million noted as NPAT and AU$92.1 million as EBITDA.
- Owing to COVID-19 pandemic, MND witnessed its adverse impact on its business performance in FY20 results. However, the Company’s bolstered balance sheet, with a cash balance of AU$208.3 million would further facilitate investment in suitable business opportunities in line, with its market and growth strategy.
Construction and engineering services industry play a pivotal role in the development and upliftment of a nation’s economy. The sector is also deemed as creator of various jobs and provider of employment opportunities to numerous people.
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Engineering services are believed to have garnered attention of late, as Australia is gradually recovering from the disasters that it experienced over the year, such as bushfires and COVID-19 pandemic.
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An Australian engineering group Monadelphous Group Limited (ASX:MND) offering construction, industrial and maintenance services to the energy, infrastructure and resources sectors witnessed an uptick of 18.935 per cent in its share price to settle at AU$10.050 on 18 August 2020. Also, on 19 August, ASX 200 stock MND last traded at AU$10.43, up by 3.781% from its last close.
Moreover, on 18 August, MND released results for the full year ended 30 June 2020, as discussed in the article.
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With this backdrop, let us quickly acquaint ourselves with the latest news of the Company.
Financial performance
Monadelphous unveiled its FY20 performance report and highlighted the revenue of AU$1,650.8 million for the period versus AU$1,608.3 noted in pcp.
This increase of 2.6 per cent on last year was driven by a considerable surge in shutdown and maintenance work across the resources vertical, particularly in the first half of the financial year, and the beginning of numerous large resource construction projects.
Furthermore, annual revenue of the maintenance and industrial services division accomplished its third consecutive record annual revenue performance of AU$1,049.8 million, indicating a y-o-y increase of 5.1 per cent.
Notably, this is the first time in the Company’s history that its maintenance division has recorded annual revenue of more than AU$1 billion.
Did you read; Monadelphous Group’s Engineering Construction & Maintenance Division Impacted By COVID-19
Source: Company’s Presentation, dated 18 August 2020
Monadelphous’s earnings before interest, tax, depreciation, and amortisation (EBITDA) noted a plunge of 13.8 per cent y-o-y and was recorded at AU$92.1 million, and net profit after tax (NPAT) noted a fall of 27.8 per cent to AU$36.5 million.
The Company highlighted that its NPAT and earnings for H2 FY20 were significantly impacted by the disruption originated due to the outbreak of COVID-19 pandemic and unsatisfactory profitability levels in the Water Infrastructure business.
Furthermore, Monadelphous also divulged its bolstered financial position with AU$208 million cash and cash equivalents as on 30 June 2020. Following disciplined and prudent financial management practices, MND noted a boosted cash flow from operations of AU$119.1 million for FY20.
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Despite the destruction caused by the COVID-19 pandemic, the Company has secured ~ AU$1.2 billion of new contracts and extensions from the starting of FY20 period. These awards comprise of several strategically essential contracts won for both Mondium and Monadelphous’s rail infrastructure maintenance services business.
It is worth noting that Monadelphous accomplished numerous strategic acquisitions amounting to AU$14.3 million during H1 FY20, enlarging the breadth of the Company’s service offering in the coal seam gas and rail sectors; and aiding the overseas diversification strategy of the business into South America.
Moreover, the robustness of its balance sheet would further facilitate the Company to invest in apt business opportunities aligned to its markets and development strategy as and when they arise.
Dividend
The Company unveiled a fully franked final dividend of 13 cents per share (cps), totalling the dividend to 35 cps for the full year.
Notably, the final dividend of 13 cents per share would be paid on 2 October 2020. The dividend would go ex on 10 September 2020, and has record date of 11, 2020.
Did you read; OSH Reduces Cost Exposure While MND Undergoing Review in Retort To COVID-19 Impact
Way ahead
Monadelphous’ reputation as a leader in its respective market, its long-established adherence to the delivery of reliable, safe and cost-competitive service solutions and its brisk and pivotal response to the outbreak of COVID-19 pandemic exemplifies the fact that MND is well-positioned to capitalise on the burgeoning opportunities and handle the challenges effectively.
Source: Company’s Presentation, dated 18 August 2020
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