FY 2021 results: Monadelphous (ASX:MND) share price crashes 14% on subdued outlook

Investors have been selling down this engineering company's shares today…

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The Monadelphous Group Limited (ASX: MND) share price is crashing lower on Tuesday following the release of its full year results.

In morning trade, the engineering company's shares are down 14% to $10.17.

Monadelphous share price crashes on subdued FY 2022 outlook

  • Revenue up 18% to $1.95 billion
  • Net profit after tax up 29% to $47.1 million
  • Cash flow conversion rate of 35%
  • Fully franked final dividend of 21 cents per share, taking the full year dividend to 45 cents per share
  • Cash balance of $175.7 million.
  • Secured $950 million of new contracts and extensions
  • Outlook: Revenues to be lower in FY 2022

What happened in FY 2021 for Monadelphous?

For the 12 months ended 30 June, Monadelphous reported an 18.3% increase in revenue. Management advised that this reflects increased demand for its services as the resources industry recovered from the delays and disruptions experienced during the initial phases of COVID-19.

In addition to this, it notes that its customers were seeking to capitalise on strong commodity prices, especially in the iron ore sector. This supported a 59% increase in revenue in its Engineering Construction division to $979 million.

Demand for maintenance services within the iron ore sector was also strong, with reduced levels experienced in the oil and gas sector.

However, a COVID-related shortfall of available skilled resources was unprecedented and resulted in labour cost and productivity pressures across the industry.

What did management say?

Monadelphous' Managing Director, Rob Velletri, appeared pleased with the result and remains positive on the future.

In respect to the latter, he commented: "While market conditions are expected to be strong, COVID-19 impacts and the skills labour shortage will continue to be a major challenge for the industry. Our attraction and retention initiatives, strategic approach to targeting new work and collaborative working relationships with our customers will become more important than ever."

What's next for Monadelphous?

One thing that appears to be weighing on the Monadelphous share price today is its outlook.

Management has warned that "with several large construction projects all completing in the next six months, full year 2021/22 revenues are likely to be lower than the previous year due to the timing of award and commencement of new major projects."

It also noted that "the shortage of skilled labour will continue to be the major challenge for the Company's operations in Australia."

The Monadelphous share price is down 26% in 2021.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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