GR Engineering Services Ltd (ASX: GNG) shares are surging nearly 4% today after the ASX mining company released its FY24 results.
Over the past six months, the GR Engineering share price has dropped by nearly 20% due to weak investment sentiment in the mining sector, which has been affected by falling global commodity prices.
The decline in the GR Engineering share price continued as BHP Group Ltd (ASX: BHP) announced a temporary suspension of its West Musgrave Project in July 2024, in which GR Engineering was engaged.
Let's find out what GR Engineering reported today.
Profit growth despite weak revenue in FY24
Key financial highlights from the FY24 report included:
- Revenue decreased by 23% to $424.1 million
- Earnings before interests, taxes, depreciation, and amortisation (EBITDA) increased by 14.6% to $50.9 million
- Net profit after tax (NPAT) increased by 13.4% to $31.2 million
- Earnings per-share (EPS) for FY24 was 18.9 cents, implying a trailing price-to-earnings (P/E) ratio of 10x
GR Engineering saw its revenue drop from a year ago as contract awards were delayed, which was largely expected.
Despite lower revenue, the company maintained a solid EBITDA margin. This performance reflects strong operational results from its core business, GR Production Services and Mipac.
The company declared a final dividend of 10 cents per share, bringing the total FY24 dividends to 19 cents per share, consistent with the previous year.
This implies a trailing dividend yield of 10%. This dividend yield and its low P/E ratio indicate attractive valuations based on trailing numbers.
Management comments
Looking back on FY24, GR Engineering Managing Director MR Tony Patrizi said:
Project execution levels remain high as works continue on the Mungari Future Growth Project, Kathleen Valley Lithium Backfill Project and Kainantu Gold Project.
GR Engineering will work through a transition period with BHP with respect to the West Musgrave Project with operations to be suspended in October 2024 and handover activities to be completed by December 2024. GR Engineering will continue to support BHP during this process.
He also highlighted GR Engineering's strong project pipeline. He added:
GR Engineering's contracted and near term pipeline across the group is solid and is continuing to grow. GR Engineering is also currently involved in ongoing early contractor work and a high volume of studies across a broad range of commodities and geographies.
Based on the pipeline and the high levels of study work, GR Engineering's medium to long term visibility for project work remains high.
FY25 outlook not provided
Regarding the FY25 outlook, investors will have to wait until the company's Annual General Meeting (AGM), which will be held on 27 November 2024.
Previously, the company expected a revenue impact of up to $80 million in FY25 related to the West Musgrave Project.
Despite some uncertainties, GR Engineering shares are rising nearly 4% today on valuation merits.
