Monadelphous eyes acquisitions
UPDATE 2.20pm: Engineering contractor Monadelphous has posted a 6.3 per cent dip in full-year profit to $146.5 million on slowing activity in the resources sector.
But investors, perhaps fearing a bigger profit slide, were heartened by an update on company's diversification and cost cutting plans, sending the stock higher.
The profit was achieved on a 10.9 per cent slide in full-year revenue to $2.3 billion.
The company declared a final, fully-franked dividend of 63 cents a share, down from 75 cents a share last year.
The payout will bring its full-year dividend to $1.23 a share compared with $1.37 last financial year.
The final dividend will be paid on October 3.
Monadelphous said a softening in the mining sector had been partially offset by a growth in work in the LNG and coal seam gas sectors.
Managing director Rob Velletri said the company had continued to focus on improving productivity to ensure it remained competitive in the tighter mining sector.
He said the company had achieved annualised cost savings of $53 million via a company-wide cost reduction program.
Mr Velletri said the company had won $1.8 billion in new contracts and contract extensions in the 2013/14 year, including the company's biggest ever construction job - a $680 million contract on the Ichthys LNG project in Darwin.
"More than 70 per cent of the new contracts are in oil and gas, highlighting the success of the strategy to position Monadelphous as a leading construction and maintenance provider to the energy market," he said.
Monadelphous said it was committed to long-term growth through further diversification and securing additional sources of revenue.
The company gave strong hints it was on the hunt for acquisitions, using its considerable cash reserves of $180.8 million, up 29 per cent on the previous year.
"Monadelphous' strong financial position and healthy balance sheet will enable the pursuit of acquisition opportunities to advance these market growth and diversification objectives," Mr Velletri said.
Shares in Monadelphous closed up 94 cents, or 6.08 per cent, at $16.39 after touching an intraday peak of $16.50.
