Perth-based NRW Holdings has reported strong growth in revenue and underlying earnings but suffered a fall in net profit after accounting for impairments linked to gold miner Gascoyne Resources.
Perth-based NRW Holdings has reported strong growth in revenue and underlying earnings but suffered a fall in net profit after accounting for impairments linked to goldminer Gascoyne Resources.
The ASX-listed civil contracting and mining services company reported a first-half revenue of $1.3 billion, up from $1.1 billion in the first half of 2022.
Its earnings before interest, tax, depreciation, and amortisation (EBITDA) swelled by 7.4 per cent to $80.1 million, up from $74.6 million last year.
However, net profit after tax fell by 22.8 per cent to $35.7 million.
This was after a $25.4 million impairment to struggling gold miner Gascoyne Resources, which awarded NRW a six-year open pit and drill-and-blast contract in 2018 for work at the Dalgaranga mine.
In November 2022, Gascoyne made the decision to suspend mining at Dalgaranga and put the operation on care and maintenance after succumbing to inflationary pressures and labour shortages.
At the time, NRW chief executive Jules Pemberton assured shareholders that its current receivables exposure from the $300 million contract was immaterial, revealing that NRW had insisted on weekly payments from the struggling goldminer.
In the half-year report, NRW’s cash balance came in at $153.8 million for the period ending in December 31, down from $219.3 million in the previous period to June 30.
The company declared an interim dividend of 8.5 cents per share unfranked compared to 5.5 cents per share franked in the prior corresponding period.
After adjusting for the tax benefit of franking, this equates to a 9 per cent increase.
Mr Pemberton said the group’s business model allowed them to respond to the variable and challenging market conditions.
“Revenue and profits have increased relative to the prior comparative period, however margins have been impacted by the La Nina weather pattern, higher levels of overheads due to the delated commencement of new work, long tender cycles and investment,” he said.
“The group’s cash balance decreased in the six months, which was expected, resulting from the unwinding of project advances received in prior periods, and the investment in working capital for the new long-term mining contract awards and extensions.
“This is expected to recover over the remainder of the year as these contracts mature.”
The company reported an updated order book of $4.9 billion after securing contracts worth almost $2 billion from companies including Rio Tinto, Talison Lithium, Jellinbah Mining and Core Lithium in the past six months.
Among the contract wins, NRW’s subsidiary Primero secured its two largest engineering, procurement and construction contracts during the period from Covalent Lithium and Strandline Resources.
In August, NRW put forward a $375 million cash and scrip proposal to the MACA board for a merger between the two prominent Western Australian companies.
The bid was rejected by the board on the grounds that rival bidder Thiess’s cash offer of $350 million was superior.
At the time, Mr Pemberton said he was disappointed that MACA was allegedly not willing to entertain the proposal and later withdrew the offer after Thiess increased its bid.
“Over the period we have extended a number of our long-term contracts, extracting additional value from the secured order book and have secured a number of new strategic contracts,” Mr Pemberton said in today’s statement.
“We have maintained a very disciplined approach to bidding new work, which has meant that we have at times not won projects that we were well positioned to secure.
“Whilst disappointing to come second to a competitor, our people know the criticality of pricing our bids responsibly in line with current market conditions.”
On the market, NRW Holdings shares were down 7.43 per cent to trade at $2.74 at 2.55pm AEDT.
“Revenue and profits have increased relative to the prior comparative period, however margins have been impacted by the La Nina weather pattern, higher levels of overheads due to the delated commencement of new work, long tender cycles and investment…” he said.
“The group’s cash balance decreased in the six months, which was expected, resulting from the unwinding of project advances received in prior periods, and the investment in working capital for the new long-term mining contract awards and extensions.
“This is expected to recover over the remainder of the year as these contracts mature.”
The company reported an updated order book of $4.9 billion after securing contracts worth almost $2 billion from companies including Rio Tinto, Talison Lithium, Jellinbah Mining and Core Lithium in the past six months.
Among the contract wins, NRW’s subsidiary Primero secured its two largest engineering, procurement and construction contracts during the period from Covalent Lithium and Strandline Resources.
In August, NRW put forward a $375 million cash and scrip proposal to the MACA board for a merger between the two prominent WA companies.
The bid was rejected by the board on the grounds that rival bidder Thiess’ cash offer of $350 million was superior.
At the time, Mr Pemberton said he was “disappointed” that MACA was allegedly not willing to entertain the proposal and later withdrew the offer after Thiess increased their bid.
“Over the period we have extended a number of our long-term contracts, extracting additional value from the secured order book and have secured a number of new strategic contracts,” Mr Pemberton said in today’s statement.
“We have maintained a very disciplined approach to bidding new work, which has meant that we have at times not won projects that we were well positioned to secure.
“Whilst disappointing to come second to a competitor, our people know the criticality of pricing our bids responsibly in line with current market conditions.”
On the market, NRW Holdings shares were down 7.43 per cent to trade at $2.74 at 2.55pm AEDT.
