Perenti (ASX:PRN) share price tumbles as profits take hit in FY21

The ASX mining services company released its full year results this morning.

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The Perenti Global Ltd (ASX: PRN) share price is tumbling in intraday trade on Tuesday, down 9% at the time of writing.

This comes as the ASX mining services company released its results for the financial year ending 30 June (FY21) this morning.

Perenti share price slides following FY21 results

Here are the highlights of what the company reported:

  • Revenue of $2.02 billion, compared to $2.04 billion in FY20
  • Earnings before interest, taxes, depreciation and amortisation (EBITDA) of $380.0 million, down from $443.8 million the previous year
  • Net profit after taxes (NPAT) of $77 million, down from $110 million in FY20
  • Final dividend of 2.0 cents per share (cps), unfranked, bringing FY21 total dividend to 5.5 cps

(*Note, the above results are all underlying)

What happened during the reporting period for Perenti?

Starting with the headwinds faced during the financial year, Perenti said it faced negative impacts from COVID-19 on its international operations. It also pointed to a tighter Australian labour market and the strengthening Australian dollar, which was 14% stronger on average in FY21 than in FY20.

Perenti said its continued focus on working capital management delivered operating cash flow (before interest and tax) of $398.9 million. That saw an improvement of its EBITDA to operating cash flow conversion to 105%, up from 96% in FY20.

The company also refinanced its US denominated high-yield bonds, with US$450 million of Guaranteed Senior Unsecured Notes issued at a lower interest rate.

As at 30 June, Perenti had available liquidity of $567.9 million, down from $605.5 million in FY20.

The dividend record date is 6 October. It will be paid on 20 October 2021.

What did management say?

Commenting on the results, Perenti’s CEO Mark Norwell said:

Our Underground business continued to be a standout performer, delivering a third consecutive year of earnings growth with a strong FY21 contribution. Impressively, this growth has been delivered in a year where we saw the slower than anticipated ramp up at several recently secured international projects due to the prolonged, and ever-changing, nature of the COVID-19 pandemic.

As expected, due to the planned contraction of our Surface Mining business following our strategic transition out of Yanfolila and Boungou, FY21 revenue, EBIT(A) and margins were softer than FY20. Pleasingly during the second half of FY21, earnings and margins generated by the Surface business more than doubled compared to the first half.

What’s next for Perenti?

A key part of the company’s growth plan is its technology driven service offering, idoba, launched in July.

Norwell said, “Through idoba we plan to improve our competitive advantage by developing a unique capability in emerging digital mining, technology and innovation.”

As at 30 June, Perenti had 3 years’ work in hand of $6.6 billion and a tender pipeline of $11.0 billion.

Based on the assumption the pandemic impacts don’t get worse, Perenti forecast FY22 revenue of $2.0-2.2 billion and EBIT(A) of $165-185 million. Those projections are also based on an Aussie dollar to green back exchange rate of 75 cents.

The Perenti share price is down 34% over the past 12 months.

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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