The Duratec Limited (ASX: DUR) share price is up this morning after the company announced 2 new defence contracts. The contracts are worth a combined $38 million.
The good news is timely for the engineering, construction, and remediation company. The Duratec share price has fallen more than 18% year to date and at the time of writing is trading at 48 cents, down 1.03%.
Let's look closer at the company's announcement.
Defence works
This morning, Duratec advised that it and its sister company DDRIC had each won a defence works contract, worth a combined $38 million.
The larger contract, won by Duratec, will bring in $25 million. While the contract won by Indigenous-owned DDRIC is worth $13 million.
Both works will take place in the third quarter of the 2021 financial year. The company said the works involved building refurbishment, electrical infrastructure upgrades, wharf remediation and specialist training facilities construction. They will take place across multiple defence sites.
The company noted that, while works will start soon, project lead times mean that most of the income from the contracts won't reach Duratec and DDRIC until the 2022 financial year.
According to the company, it has a presence on nearly half of all of Australia's defence bases. It also has more than $200 million worth of defence tenders awaiting decisions.
Commentary from management
Duratec managing director Phil Harcourt commented on the importance of defence contracts for the companies:
The diversity and complexity of work type awards and locations demonstrates the experience, capability and national presence of Duratec which retains the agility of a local business. We understand the importance of maintaining Defence capability, security of the project work sites and satisfying the needs of all stakeholders.
Defence continues to be a key strategic focus for Duratec… The pipeline of opportunities in this sector, together with the resources sector (in particular), continues to grow for both Duratec and DDRIC.
Duratec share price snapshot
Despite the positive news, the Duratec share price opened at 49 cents and immediately slipped 1.03% to 48 cents.
It is down by 21.31% over the last 12 months.
The company has a market capitalisation of around $115 million, with approximately 237 million shares outstanding.
