Following a solid first half of FY24, diversified industrial services company SRG Global (ASX: SRG) has retained the momentum. The Company has been awarded multiple contracts with existing clients in the renewable energy, resources and energy sectors across Australia. The value of the new works secured is $125 million.
The new wins include a six-year term contract for asset integrity and rope access services with Rio Tinto at their Yarwun Refinery in Gladstone, Queensland (QLD). The contract works will commence in June 2024 and are expected to be completed in 2030.
Secondly, it was awarded an asset integrity services contract extension with Origin Energy at their upstream infrastructure network across Queensland. The contract has commenced and is expected to be completed in 2025.
Third, it won a specialist structural design and construction contract to replace the existing roof support, walkway and water shedding system at the Tumut 1 Power Station site for Snowy Hydro Limited in Cabramurra, New South Wales. The contract has commenced and is expected to be completed within 18 months.
Finally, it was awarded an initial infrastructure contract for the design and construction of concrete tanks for BHP Iron Ore in Newman, Western Australia (WA). The contract has commenced and is expected to be completed within 24 months.
SRG Global Managing Director David Macgeorge said, “We are pleased to secure these diverse range of contracts across Australia through established relationships with Tier 1 clients across Australia. I am particularly pleased that the combined offering of the up-front capabilities of our Asset Care business combined with the back-end execution of our Asset Maintenance team continues to gain traction with our clients.”
In H1 FY24, SRG’s revenue was $510.7 million, up 34% on H1 FY23. Its EBITDA stood at $45.1 million, up 33%, and its net profit rose by 34% to $17.7 million. During the period, it had Work in Hand of $1.9b with an anticipated pipeline worth $6.5 billion, including exposure to government-backed infrastructure investment, high-quality commodities, diverse industries and a blue-chip client base. Most of its pipeline is in the asset maintenance and engineering and construction divisions.
For the second half, in March 2024, SRG secured a contract to upgrade the wharf at Port Kembla, New South Wales, valued at about $35 million. In April, it was awarded multiple contracts with new and existing clients in the transport, resources and energy sectors across Australia. The value of the new works secured amounted to $150m and included clients like NRG at Gladstone, Department of Transport, Victoria, Evolution Mining, Pilbara Minerals and Genesis Minerals.
In light of its positive results, the Company upped its FY24 EBITDA guidance to a range of $95m to $100m.
Macgeorge added, “SRG Global continues to go from strength to strength, underpinned by our strong growth profile and recurring earnings base approaching 80% of our overall earnings which is in line with our long-term strategy.”
With its diversified industrial services strategy and these new contract wins worth $125m from existing clients, SRG Global seems well-positioned for growth.
Alinda is a Business Reporter for The Sentiment
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