Shares in Monadelphous Group have jumped to a four year high after the engineering services firm revealed a solid pipeline of orders and forecast a 30 per cent increase in half-year revenue.
Managing Director Rob Velletri told the company’s annual general meeting that the company has secured contracts worth $275 million since the start of the financial year.
These include a two year supply maintenance contract to for Rio Tinto in the Pilbara, a 12-month extension contract at Woodside’s Karratha gas plant and a number of new deals in North America, New Zealand, Mongolia and PNG.
Market conditions in the Australian resources and energy sectors are showing signs of recovery, Mr Velletri added.
“Investment in sustaining capital is forecast to increase, with significant planned capital expenditure announced in the iron ore industry, to maintain production levels,” he said.
“We have a strong competitive position and are well placed to capitalise on these opportunities and continue to grow our recurring revenue base.”
The number of contracts secured in the past year, together with increased construction activity at the Ichthys LNG project and rising demand for maintenance services, would contribute to half-year revenue growth in excess of 30 per cent, Mr Velletri said.
While revenue is expected to moderate in the second half of the fiscal year, Monadelphous still expects solid growth in full-year revenue.
However, the company expects a continued decline in margins as its business portfolio becomes more diversified.
Monadelphous posted a 14 per cent decline in profit in 2016/17, while revenue slipped nine per cent.