Monadelphous Group bags another $230m in new contracts

Monadelphous Group (ASX: MND) was up slightly higher at the open after the engineering company announced new contracts, which together with extensions in the resources and energy sectors in Australia and PNG amount to around $230m.

Today’s announcement follows the $400m of new contracts and extensions in the resources and energy sectors that the company updated the market on mid-February.

On a region-by-region basis, new contracts announced today are:

WA

A contract with Rio Tinto for the provision of shutdown works at the Greater Tom Price operation in the Pilbara region of WA.

The work includes upgrades and modifications to existing process plant infrastructure at the Western Turner Syncline Phase 2 project. This work is expected to be completed in the second half of 2022.

Also in WA, Monadelphous extended a three-year contract to provide operation and maintenance services at Synergy’s Muja Power Station in Collie, as well as a two-year extension to provide maintenance, turnarounds and brownfields modifications at a customer’s offshore liquefied natural gas facility.

QLD

In Qld, the company signed a three-year contract with Origin to provide turnaround and shutdown support services at their coal seam gas upstream facilities for Australia Pacific LNG operations.

NSW

In NSW, Monadelphous agreed to a multi-disciplinary construction services contract with Tronox Mining Australia in Broken Hill. The work is expected to be completed in the second half of 2022.

PNG

Finally, in PNG Monadelphous has been awarded a contract with Newcrest Mining (ASX: NCM) to provide engineering, procurement and construction services on the CCD 3 & 4 Refurbishment Project at Lihir Island.

The work, which includes the major overhaul of two tanks associated with the gold production facilities, is expected to commence onsite in July 2022 and be completed in mid-2023.

Half year

While Monadelphous has struggled to attract investor support over the past year, a positive market response to the company’s interim result to 31 December 2021 saw the share price jump from $8.99 mid-February to $11.55 early March.

Since then the share price has bounced -4% lower to $11.15.

Underscoring the company’s positive first half result was a 12% uplift in revenue, with net profit after tax of $30.1m, up 17.7% from the previous year.

During the period the company also secured around $860m of new contracts and contract extensions.

Management expects a shortage of skilled labour to continue to be challenging, especially in WA.

Based on an expected decline in construction activity in the second half, management also expected full-year revenue for FY22 to be approximately -5–10% lower than the previous year.

The Monadelphous share price over one year.