Why the Decmil (ASX:DCG) share price jumped 9% today

The Decmil Group Limited (ASX:DCG) share price was on form and jumped 9% higher on Wednesday. Here's why investors were buying shares…

| 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 Decmil Group Limited (ASX: DCG) share price was on form on Wednesday.

At one stage, the engineering company's shares were up as much as 9% to 60 cents.

The Decmil share price eventually closed the day 7% higher at 59 cents.

Why did the Decmil share price zoom higher?

Investors were buying Decmil shares on Wednesday following the release of its half year results. Those results revealed a big improvement in its profitability despite softer revenues.

For the six months ended 31 December, the company reported a 30% decline in revenue to $165.1 million.

However, earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $5.6 million. This compares to an EBITDA loss of $19.9 million a year earlier.

It was a similar story on the bottom line, with its profit coming in at $0.6 million. This is a huge improvement on the $31.4 million loss it posted a year earlier.

Management notes that its strong result was underpinned by renewed strategy to target contracts with blue chip clients within Decmil's areas of core expertise.

Positively, at the end of the period, the company had work in hand of ~$600 million. It expects this to expand further during the second half as government spending on infrastructure development continues its strong momentum.

Management commentary

Decmil's Chief Executive Officer, Dickie Dique, commented: "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."

"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. This has enabled us to beat our own expectations and achieve a period of profitability in FY21."

"Crucially, we have also reaffirmed our F150+ accreditation, which in conjunction with a reinforced working capital position will drive our ability to target the burgeoning tender pipeline of infrastructure works from the Federal and State Governments of over $7 billion within the Company's core capabilities."

Outlook

There was no guidance for the remainder of the year. However, management anticipates that the strong momentum experienced in the first half will continue into the second half of the fiscal year.

The company also intends to maintain its renewed focus on targeting lower risk projects with blue chip customers across the infrastructure, resources, energy and construction sectors. It notes that these sectors continue to have a strong pipeline of upcoming work.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

Market up or down
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors had a rough end to the week...

Read more »

Man in an office celebrates at he crosses a finish line before his colleagues.
Share Gainers

4 ASX 200 shares racing ahead of the benchmark this week

ASX investors sent these four stocks soaring 12% to 18% this week. But why?

Read more »

Man pointing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why BHP, Coronado Global, EBR Systems, and Whitehaven Coal shares are pushing higher today

These shares are ending the week on a positive note. Let's find out why.

Read more »

a young woman looks happily at her phone in one hand with a selection of shopping bags in her other hand.
BNPL shares

Up 87% since April, why the Zip share price can keep flying higher into 2026

A leading fund manager expects more outsized gains from Zip shares ahead.

Read more »

Person pretends to types on laptop drawn in sand.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a miserly session for investors today.

Read more »

Happy coal miner.
Share Gainers

Up 75% this week, why is this ASX All Ords stock rocketing again today?

Investors are piling into this ASX 300 stock on Wednesday. But why?

Read more »

A young woman smiles as she rides a zip line high above the trees.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a bountiful session for investors this hump day.

Read more »

Man looking happy and excited as he looks at his mobile phone.
Share Gainers

Why Coronado, DroneShield, Lovisa, and Mayne Pharma shares are racing higher today

These shares are having a good time on hump day. But why?

Read more »