Why the Monadelphous share price is up 3% after meeting guidance

Engineering group Monadelphous Group Limited (ASX: MND) has seen its revenue and profit drop as expected after the completion of a major project in the prior period.

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Engineering group Monadelphous Group Limited (ASX: MND) has announced its interim results, meeting revenue guidance and signalling a positive outlook for the remainder of the fiscal year.

The group met revenue guidance of $830.5 million, which represents a 5% decrease on the previous corresponding period. This decrease was primarily due to a fall in construction revenues as a result of the completion of a major project in the prior period and the timing of new project opportunities.

Maintenance revenues saw a significant increase and there was a growing contribution from infrastructure markets with an increase in new contracts won. The group also saw increased offshore oil and gas contracts activity and growing demand in the resources sector.

Net profit after tax of $30.7 million was 18.3% lower than the previous corresponding period as a result of lower revenues, increased depreciation and a reduction in interest income.

"Overall, the long-term outlook for Monadelphous remains positive as operating conditions continue to strengthen and the pipeline of resources construction opportunities gains in number," said Managing Director Rob Velletri in a statement.

Strengthening conditions in the resource and energy sectors were highlighted, with infrastructure investment said to be at a "healthy" level.

The company stated that it is in a favourable position to secure new work on major projects going forward, which it expects will "generate significant revenue in 2019/20 and beyond".

The company announced a 25 cents per share fully franked dividend to be paid on the 29 March.

Motley Fool contributor Cale Kalinowski has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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