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Monadelphous lifts profit by 38pc
The West Australian

UPDATE 1pm: Shares in Monadelphous slumped more than 6 per cent despite the engineering company posting a record $79.1 million first-half profit on the back of big investments in large resources projects.

Investors looked past the 38 per cent profit hike and focused on the company's commentary suggesting softer conditions and challenges to growth in the 2013/14 year.

"The company's performance in the first half of 2013 reflects the record level of resources and energy developments underway, the unprecedented volume of new contracts secured in the previous financial year and the current intensity of engineering construction activity," managing director Rob Velletri said in a statement.

He forecast a 35 per cent rise in revenue over the full financial year, after revenue rose by 47 per cent in the first half to $879.5 million.

"The pipeline of engineering construction opportunities flowing from the large volume of approved projects, particularly in the iron ore and LNG (liquefied natural gas) sectors, will continue to drive solid demand for the company's services," Monadelphous said.

But it expects revenue growth to slow in the 2013/14 financial year which, the company said, would be a year of consolidation.

"Uncertainty remains in respect of the rate of new project approvals in the resources and energy sector as customers reassess their capital expenditure plans and focus their attention on high-return options along with improvements in project delivery productivity.

"Customers are tightening discretionary expenditure and reducing overall costs.

"With margins under pressure in this environment, the company remains focused on managing execution risks and improving productivity.

Monadelphous suggested project delays and a slowdown in near-term new major project approvals was likely to reduce the pipeline of opportunities in the medium-term in the construction division.

The company declared a fully-franked interim dividend of 62 cents per share, up from 50 cents at the same time in the previous year.

Shares in Monadelphous were off $1.85, or 6.64 per cent, to $26.23 shortly before the close of trade.