Industrials

Southern Cross upgrades earnings guidance: Record 2H revenue on cards

Tue 07 Jun 22, 11:41am (AEST)
Construction - Construction site, silhouettes of construction industry workers on scaffolding against the sunset light.
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Key Points

  • Southern Cross expects full year FY22 revenues to hit $550m driven by WA major projects
  • Company expects $45m with no debt at the end of the FY, even after paying over $12m in dividends
  • Market Index highlighted Southern Cross in March this year on the back of Argonaut recommendations

Southern Cross Electrical Engineering (ASX:SXE) has seen a 6% jump in its share price to 61.5c in the first hour of trade as the company flags its upgrade of FY22 full revenue forecast to $550m. 

The company notes its March quarterly results reflected record activities for the group; the current quarter (the final quarter of the 2022 financial year) is expected to exceed the March results. 

The group employs a workforce of some 2,000 people. Q4FY22 earnings are expected to reach over $34m, upgraded from $29m. 

(Source: SCEE) A chart outlining the company's overall structure
(Source: SCEE) A chart outlining the company's overall structure

Covid impacts overestimated

Resources contracts in WA are a large driver of full year revenue growth, with Rio Tinto Gudai-Darri, MARBL Kemerton Lithium Plant and BHP Villages Security contracts all reflecting big earners for the industrials provider. 

Southern Cross Electrical is an electrical, instrumentation, communication and maintenance services company supplying large-scale electrical, control and instrumentation services for major projects.

The company also went out of its way to note the re-opening of WA borders had not led to any expected covid disruptions, meaning that outsourced labour from the east coast has been easy to procure. 

WA driving forward strong results

WA has, as ever, driven forward the company's revenue performance even as works in NSW and ACT remain subdued as covid's impact on the construction industry continues to echo through into the second half of 2022. 

All in all, Southern Cross expects to end the year with $45m in cash and no debt, even after paying dividends of $12.7m, and with a FY23 order book starting off at over $500m. 

These results are, however, subject to a future audit.  

In March this year, Market Index News noted Southern Cross was one of Argonaut Securities' top five picks at the time.

Despite recent sell-off activity, the uptick in interest on today's news is clear
Despite recent sell-off activity, the uptick in interest on today's news is clear

 

Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication. Email Jon at [email protected].

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