The Monadelphous Group Limited (ASX: MND) share price has surged more than 16% higher after the engineering company released its FY20 financial results today.
How did Monadelphous perform for FY20?
The Monadelphous share price lifted after the company announced a net profit of $36.5 million for FY20, a 28% drop from a year ago. The company also reported a 1% increase in revenue for the full-year of $1.65 billion.
Monadelphous' full-year report highlighted the performance of its maintenance and intratubal services division for FY20. The division recorded an annual revenue of $1.05 billion, up 5.1% on the year prior.
The company said the FY20 results reflected a significant increase in shutdowns and maintenance work across the resources sector. Monadelphous noted that the second half was markedly affected by the economic and social impacts of the COVID-19 pandemic.
As a result, Monadelphous will pay a reduced final dividend of 13 cents per share. This compares to 23 cents last year. Total dividends payable for the year are 35 cents, reflecting a 91% payout ratio from the company's net profit after tax.
How has COVID-19 affected operations?
Monadelphous reported that restrictions induced by the pandemic had slowed potential new contracts. It estimated that 10% of annual revenue had been deferred into the future.
In addition, the company said customers had reduced non-essential work and delayed discretionary expenditure. The pandemic had also caused supply chain issues and delays in several construction projects.
What is the outlook for Monadelphous?
In its report, Monadelphous assured investors that the company was being proactive to ensure long-term sustainability. The company cited its prudent financial management and strong cash flow of $119.1 million for FY20. In addition, Monadelphous highlighted its strong cash balance of $208 million.
Despite the uncertain global economic outlook, Monadelphous expects the resources sector to provide a steady flow of opportunities. The company's management assured shareholders that Monadelphous was entering the new financial year with a solid workload and was well-positioned to capitalise on future opportunities.
Foolish Takeaway
The Monadelphous share price has surged more than 16% higher to trade at $9.81 at the time of writing.
