When it comes to construction, rising raw material expenses have plenty of builders under pressure but engineering company SRG Global (ASX: SRG) seems to have found a somewhat simple solution to the industry pressure – just work for those with bottomless cheque books.
Ok, it might not be as simple as it sounds but that hasn’t stopped SRG racking up contract work from some of Australia’s largest companies with confirmation of new multi-disciplinary contracts to provide maintenance work to Fortescue’s Iron Bridge Project, and packaging giant Visy.
The first is a 5-year contract for a Master Agreement for Maintenance and Shutdown Services where SRG will provide rope access and electrical maintenance requirements across Iron Bridge’s new magnetite project.
The second is a maintenance contract to provide Visy with specialist refractory installation at their Adelaide glass manufacturing facility.
Combined, the deals are valued at $100 million with SRG to commence the work immediately, adding to a very strong pipeline of contract work secured over the past year, despite industry headwinds in the construction sector.
“We are excited to be expanding our relationship with Fortescue and play an integral role in the maintenance of the Iron Bridge joint venture operation, which is such an innovative and significant project for Western Australia,” said SRG Global Managing Director, David Macgeorge.
“We are equally pleased to be selected by Visy Industries Australia to deliver the critical maintenance services required for their glass manufacturing operations in Adelaide.
“These contracts represent another significant step forward in our strategy to expand services with blue-chip clients across multiple industries and build on our portfolio of annuity earnings agreements.”
The wins come just two weeks after SRG Global announced a $30m contract to design, supply and install specialist engineered curtain wall facades at 360 Queen Street in the Brisbane CBD, estimated to be completed in 2025. That was then followed up a week later with a $20m contract to provide engineering services to the Defence sector at the HMAS Stirling and Henderson facilities in Western Australia.
For the half year ended 31 December 2021, SRG Global reported $297m in revenue representing a 5% increase on the previous year which is expected to increase further given the Company has more than $1 billion in upcoming work on hand. This flowed down to the bottom line where the Company logged $10.1m in adjusted NPAT, a 102% increase.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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