Monadelphous share price leaps 12% on record maintenance and industrial services revenue

How did the engineering company perform in FY 2022?

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Key points

  • Monadelphous shares are surging today following the company's full-year results
  • The engineering company reported a robust financial performance underpinned by favourable market conditions in the resources and energy sectors
  • The board declared a final dividend of 25 cents per share to be paid on 30 September

The Monadelphous Group Ltd (ASX: MND) share price is rocketing today following the release of the company's full-year results.

At the time of writing, the engineering company's shares are up 7.52% to $12.30 each. Earlier today, they hit a high of $12.795 a share, 11.84% higher than yesterday's closing price.

Monadelphous share price rises as record maintenance and industrial services revenue soars

Monadelphous delivered its FY 2022 results for the 12 months ended 30 June 2022. Here are some of the key financial highlights:

  • Total revenue down 1.2% year-on-year to $1.93 billion
  • Record maintenance and industrial services revenue up 19.4% to $1.17 billion
  • Net profit after tax (NPAT) up 11% to $52.2 million
  • Earnings per share (EPS) up 10.5% to 54.9 cents
  • Final dividend of 25 cents per share, fully franked, bringing the full year dividend to 49 cents per share, up 8.9%
  • Cash on hand up 4.3% to $183.3 million

What happened in FY 2022?

Monadelphous reported an outstanding financial performance on the back of positive market conditions throughout the year.

The business experienced strong demand for maintenance services across the resources and energy sectors. This was underpinned by customers maintaining high levels of production, capitalising on favourable commodity prices.

Monadelphous' maintenance and industrial services division reported record revenue of $1.17 billion. Management highlighted the increased activity in oil and gas as well as Chile and PNG operations which drove the result.

In addition, the engineering construction division reported revenue of $774.4 million for the year. Revenue declined towards the backend of the financial year, however, as numerous projects were completed in the first half. This included BHP's South Flank Project, Rio Tinto's West Angelas Deposits C & D Project, and MARBL Lithium joint venture's Kemerton lithium hydroxide plant.

On the bottom line, the company achieved an NPAT of $52.2 million, an increase of 11% on the prior corresponding period.

The Monadelphous board declared a final dividend of 25 cents per share, fully franked, yielding a dividend payout ratio of 90%.

What did management say?

Monadelphous managing director Rob Velletri talked about the favourable market conditions providing the company opportunities for growth. He said:

Demand for our maintenance services is expected to remain strong and resource developments in iron ore and oil and gas as well as the significant pipeline of investment in battery metals and renewable energy will provide a solid volume of construction prospects in the coming years. However, a highly competitive labour market will remain the major challenge.

What's the outlook for FY 2023?

Looking ahead, Monadelphous advised that there's a significant number of opportunities across resources and energy sectors in Australia and overseas.

In particular, the Australian iron ore industry is expected to "remain buoyant with capital and operating expenditures required to sustain iron ore production levels".

Furthermore, the strong hype surrounding the electric vehicle revolution is driving substantial investment in battery metals. This includes lithium, copper, nickel, and rare earths.

Monadelphous said these markets will present ongoing opportunities for its projects in Australia, South America, Mongolia, and Papua New Guinea.

Lastly, favourable conditions in the oil and gas sector are also buoyant with construction opportunities from new LNG projects currently in the pipeline. Demand for oil and gas maintenance services is anticipated to remain strong.

While Monadelphous spoke about the outlook, it did not provide any earnings or profit guidance for FY 2023.

Monadelphous share price snapshot

In 2022, the Monadelphous share price has gained 32% and is up 7% when looking over the last 12 months.

For context, the S&P/ASX 200 Industrials (ASX: XNJ) sector is down 3% for the current calendar year.

Monadelphous commands a market capitalisation of approximately $1.18 billion.

Motley Fool contributor Aaron Teboneras 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 Scott Phillips.

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