- Following the implementation of its new revitalisation strategy in May last year, Decmil Group (DCG) has reported a promising return to profitability
- For the six months ending December 31, 2020, net after-tax profit came to $574,000 compared to a loss of more than $31.4 million the year before
- It comes despite a significant drop in revenue, which fell from $236.9 million to just $165.1 million
- The company’s strategy focuses on lower risk projects with blue chip customers in its core business areas, which collectively have more than $7 billion worth of potential contracts
- Decmil Group is up 7.34 per cent to $0.58 per share
Following the implementation of its new revitalisation strategy in May last year, Decmil Group (DCG) has reported a promising return to profitability.
For the six months ending December 31, 2020, net after-tax profit came to $574,000 compared to a loss of more than $31.4 million the year before.
The strong result comes despite a significant drop in revenue, which fell roughly 30 per cent from $236.9 million to just $165.1 million.
Decmil said the income slide was largely due to a “subnormal” order book as a result of the financial challenges brought on by the COVID-19 pandemic but added that its pipeline of contracts has since improved.
During the period, Decmil secured a $55 million contract for the design and construction of the Albany Ring Road in Western Australia, which began in September, and a $41 million contract for non-mining infrastructure work at the Iron Bridge Magnetite Project in the Pilbara, which began in October.
Work on a $39 million contract for non-process infrastructure at Rio Tinto’s Mesa A and Mesa J iron ore mines, also in the Pilbara, is expected to begin soon.
“The company has successfully navigated several key operational and financial obstacles and emerged in an increasingly improved position as the first half of the 2021 fiscal year progressed,” said chief executive Dickie Dique.
“Decmil’s business structure has been streamlined, our focus on prudent capital management has increased, and we are successfully securing lower risk contracts from blue chip clients,” he added.
Notably, the company reaffirmed its F150+ accreditation, which allows it to tender for work on government transport infrastructure projects in Australia worth more than $150 million.
This adds to potential contracts in its core infrastructure, resources, energy and construction sectors that collectively amount to more than $7 billion.
Decmil now expects the strong momentum experienced over the last six months to continue, with roughly $600 million on its order book as of December 31.
The company was also able to substantially reduce its debts, repaying a $25 million loan to National Australia Bank and reducing amounts owing to surety providers for called bonds from $27 million to $16 million.
Despite that, Decmil finished the period with a cash position worth $29.7 million and a working capital position worth $37.2 million.
Decmil Group is up 7.34 per cent to $0.58 per share at 2:03pm AEDT.