ASX 200 mining services share storms 27% higher on record revenue result

The NRW Holdings Limited (ASX: NWH) share price has popped 27% this morning on the back of a positive trading update.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The NRW Holdings Limited (ASX: NWH) share price has popped 27.88% this morning on the back of a positive trading update. The company announced record revenue and pushed forward its interim dividend decision, which had previously been deferred to August.

About NRW Holdings

NRW Holdings is a provider of diversified services to the mining, energy, civil infrastructure and urban development sectors throughout Australia.

The company delivers a wide range of services including civil expertise, contract mining, drill and blast, specialist maintenance, and industrial engineering. 

With this, NRW supports more than 100 projects around Australia. Its client base comprises big ASX names like BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO), and Newcrest Mining Limited (ASX: NCM).

What did NRW Holdings announce?

This morning, NRW revealed its FY20 performance to the end of April remains strong despite the effects of COVID-19. Notably, it has seen no material change to planned activities in its 4 business divisions of civil, mining, drill and blast, and mining technologies.

In terms of financial performance, NRW reported revenue of $1.6 billion for the 10 months to April 2020. This represents record revenue compared to any previous full financial year. For reference, NRW posted $1.1 billion of revenue for FY19.

Meanwhile, earnings before interest, tax, depreciation and amortisation came in at $177 million. This was up 22.9% from FY19, as the company integrates last year's $116 million BGC Contracting acquisition into its business.

Importantly, NRW also revealed an improvement in net debt, which stood at $115 million at the end of April 2020. This compares to the company's $154 million net debt position at the end of last year. NRW expects to report much lower debt of around $60 million by the end of FY20 following reviews of equipment rental agreements.

Outlook and interim dividend

NRW noted it is on track to meet its FY20 revenue guidance of $2 billion for the full year. Commenting on the performance of the business, CEO Jules Pemberton said: 

We have had to make significant changes to the way we work but have been able to safely do that whilst supporting our clients to meet project objectives and day-to-day operational requirements.

Importantly for income investors, NRW has resolved to pay its interim dividend of 2.5 cents per share on 9 June 2020. In late March, the company announced its intention to defer this interim dividend, pending a review to be held in August. However, given NRW's continued strong performance, the review was brought forward.

Motley Fool contributor Cathryn Goh 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.

More on Resources Shares

A miner holding a hard hat stands in the foreground of an open cut mine
Resources Shares

A close look at BHP shares. What is the mining giant's next move?

Let's take stock of what the experts think.

Read more »

Miner looking at a tablet.
Resources Shares

Short bets on Pilbara Minerals shares are declining. Is now the time to buy?

Could the trade be unwinding?

Read more »

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Resources Shares

'I hate what I have done': Mineral Resources share price down as Ellison laments actions

Managing Director Chris Ellison says he deeply regrets the impact of his 'error of judgement'.

Read more »

A man in shirt and tie uses his mobile phone under water.
Resources Shares

The Lake Resources share price is sinking yet again. Here's why

The longer-term downtrend continues.

Read more »

Miner and company person analysing results of a mining company.
Resources Shares

With a P/E ratio of 6, is the Fortescue share price a bargain?

Let’s dig into whether Fortescue shares are good value or not, in my eyes.

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain where heavy mining equipment can be seen in the background.
Resources Shares

Down 15% this year, where's the next stop for Rio Tinto shares?

Where to next for the miner?

Read more »

Miner and company person analysing results of a mining company.
Resources Shares

Can Pilbara Minerals shares cross the $3 mark?

Lithium stocks continue to split opinion.

Read more »

Female miner smiling in front of a mining vehicle as the Pilbara Minerals share price rises
Resources Shares

'Encouraging signs' for Fortescue shares heading into 2025

This leading investment expert forecasts brighter days ahead for Fortescue shares.

Read more »