Despite construction industry challenges, Duratec delivers earnings growth

The Australian construction market has seen a range of challenges from raw material costs rises, but also opportunities from a need for better infrastructure to service population growth. Despite the dynamic environment in the Australian construction market, the demand for high-quality engineering and remediation services has driven Duratec’s (ASX: DUR) revenue and earnings growth for FY24.

For the year ending on June 30, 2024, Duratec reported revenue of $555.8 million, a 13% increase from FY23. EBITDA increased by 22.6% to $47.6 million, and net profit after tax rose 11.4% to $21.4 million. 

The Company’s gross profit margin improved to 17.3%, compared to 16.7% in FY23 while shareholders were rewarded with a fully franked dividend of 4.0 cents per share.

Duratec Managing Director, Chris Oates, said, “I am very proud of what we have accomplished over the past year, consistently delivering excellent results on challenging and exciting projects.”

“In FY24, the successful implementation of our corporate strategy, with a focus on being a trusted partner of choice, has delivered record revenue and profitability.”

“Our strategic approach, including the use of ECI, has consistently delivered optimal outcomes for clients and stakeholders through collaboration and comprehensive solutions.”

The Defence sector experienced a slight decline in revenue to $220 million, attributed to delays in project awards, though a strong pipeline of future projects remains. 

The Mining & Industrial sector showed substantial growth, with revenue increasing by 79% to $155.6 million, driven by long-term service agreements. 

The Building & Facade sector reported revenue of $111.3 million, influenced by projects like the Central Park Tower in Perth. 

The Energy sector’s revenue declined to $46.6 million due to the completion of major projects, with a continued focus on long-term maintenance opportunities. 

Duratec’s ‘Other’ sector, encompassing transport infrastructure projects, generated $22 million in revenue. The establishment of a new Marine Division aims to expand Duratec’s presence in the Defence Marine market. 

Subsidiaries WPF Duratec and DDR Australia contributed positively, with WPF’s acquisition of A&B Welding enhancing its fabrication capabilities and DDR Australia increasing its revenue through acquisitions and heightened Defence spending.

Duratec anticipates growth in FY25, supported by its order book and expected project awards across various sectors. The Company’s focus on Early Contractor Involvement and maintaining client relationships is expected to continue influencing its project execution strategy. 

“As we look forward to the next financial year, I am confident we will continue to deliver profitable growth in line with our strategy, supported by our diverse capabilities across Australia and beyond,” Oates added.

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Sidra Surmed

Sidra is a Business Writer with The Sentiment

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