Australian contract mining heavyweight NRW Holdings is forecasting a FY24 EBITA range of A$175-185 million on more than $2.8 billion of revenue after reporting $166.3m EBITA and $2.7b revenue for FY23.
CEO Jules Pemberton said the group’s confidence in its FY24 revenue and earnings was underpinned by record secured work of $2.7 billion. It also had $2.5b of FY25 revenue buttressed by secured contracts.
“With the successful completion of FY23’s challenging contracts, an anticipated improvement in the operating environment and the migration to more balanced risk sharing contract structures in the current project portfolio, we expect to deliver far better performance across the group during FY24 and beyond, driven by a very strong demand for our services,” Pemberton said this week.
NRW’s final A8c-a-share dividend to shareholders takes its full-year payout to 16.5c per share, up 12% on FY22 on a comparable franked basis.
Rain delays to projects in Queensland, significant cost inflation and skilled labour pressures on construction projects, and a highly competitive contracting market, were key headwinds faced by NRW and its peers in the past 12 months.
“Unfortunately, as a result of these challenges our margins have been under pressure and in some businesses, notably Primero, the impact of cost escalation and labour availability on fixed price projects has been significant,” Pemberton said.
He said civil business markets remained buoyant with state governments in Western Australia and Queensland continuing to support new multi-year infrastructure projects, the latter preparing for the 2032 Brisbane Olympic Games.
Activity levels in the private infrastructure sector were also recovering.
“In the resources sector, the iron ore replacement and sustaining capital cycle creates a visible pipeline of new mine developments, expansions and upgrades as the major miners continue to expand the footprint of their operations to access replacement tonnages, maintaining their production levels and supporting growth,” NRW said.
“These activities support a steady pipeline of new project opportunities. In addition, the renewable energy commitments of the resources sector’s clients will drive significant new investment in mine site renewable energy generation and associated infrastructure.
“Beyond iron ore, the rapid expansion of the battery critical minerals sector is seeing the development of new mining and processing projects, often in very remote locations, driving a sustained need for supporting infrastructure.
“The challenging macroeconomic environment, characterised by high inflation and tight labour market conditions, together with persistent delays in regulatory approvals, continued to impact confidence levels in certain sectors thereby delaying clients’ approvals of new projects.
“However, NRW has recently begun to see the impact of these factors fading as clients adjust their criteria for capital investment decisions to these conditions, which are expected to continue for the foreseeable future.”
NRW’s mining work in hand is said to total $3.9b, with $400m of current active tenders.