'Challenging': Company's survival tactic as downturn bites
LEADING Australian engineering group, Monadelphous, wants to diversify into new services and markets, as the mining and energy downturn bites.
In their half year report it was revealed the company's profit was down 24.1% on the previous corresponding period.
Sales revenue was also down 14.4%. "(This) reflected lower construction activity levels, which were partially offset by rising maintenance and industrial services revenues, highlighting the continuing transition in the resources and energy sectors from the investment phase to the production phase," the report read.
Despite this, Monadelphous ended the period with a record net cash position of $226.2 million, and a cash conversion rate of 172%.
Some work the company is doing was fabrication and supply of wellhead separator skids for APLNG in the Surat Basin.
"The resource and energy markets in Australia remain challenging, despite a recent improvement in commodity prices," the company's report reads.
"Capital expenditure levels remain at historically low levels, as the rate of major investment in new production slows."
Managing director Rob Velletri said the company was in a solid position for long term growth, with a strong balance sheet providing it with substantial capacity to invest in new businesses.
"We have demonstrated our agility in responding to the downturn in the resources sector by successfully capitalising on our strong position in the maintenance services sector and entering a number of new domestic and international markets" he said.