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Highlights
- Macmahon (MAH) increases interim dividend despite lower net profit.
- The company’s revenue surged 20% to $1.2 billion for the second half of 2024.
- Macmahon (MAH) blames net profit drop on the costs of its recent Decmil acquisition.
Mining contractor Macmahon (ASX:MAH) reported a notable boost in its interim dividend despite a decline in net profit, driven by strong revenue growth following its acquisition of rival Decmil. The company’s financial performance for the second half of 2024 showed significant growth in earnings and revenues, but investors reacted negatively to the profit drop, resulting in a 7% decrease in its share price.
For the period ending December 2024, Macmahon (MAH) saw a 20% increase in revenue, reaching $1.2 billion. This was attributed to the integration of Decmil, a company it acquired for $120 million in August 2024. The deal has strengthened Macmahon’s position in the mining sector, which includes operating at major mine sites such as BHP’s Olympic Dam in South Australia and Anglo-American’s Dawson South coal project in Queensland.
In response to the solid revenue performance, Macmahon (MAH) raised its interim dividend by 10 cents to 55 cents per share, marking a 22% increase over the same period last year. However, despite the rise in dividends, Macmahon reported an 18% drop in net profit, which fell to $30 million.
The company cited the costs associated with the acquisition of Decmil as a key factor in the decline in profitability. Although the integration of Decmil has boosted Macmahon’s revenue, the acquisition has also led to increased expenses that impacted the company’s bottom line. The 3% year-on-year growth in underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) to $181.3 million highlights that the company’s operational efficiency remains strong despite the temporary setback in profit.
Investors appeared to focus on the profit decline, and Macmahon’s (MAH) stock price dropped 7%, closing at 30.7 cents per share. While the company continues to show strong revenue growth and an optimistic outlook, the market's response underscores the importance of managing acquisitions and their associated costs.
Overall, Macmahon’s (MAH) performance in the second half of 2024 reflects its strategic expansion efforts, with a growing portfolio of projects and an improved financial position. However, the impact of its recent acquisition on profit margins highlights the challenges that come with such expansion strategies.
