Valmec expands construction portfolio with $15m water contract win

Infrastructure construction and maintenance company Valmec (ASX: VMX) are continuing to scoop up contracts in Western Australia amid the abundance of resource projects coming online with a $15 million water deal from Water Corporation the latest to be secured. 

The new contract leverages an existing relationship between Valmec and Water Corp with Valmec having provided more than $45m of works in recent years. 

“These contract wins are a result of our well-established relationships and reputation across our focus areas. Importantly, we continue to build our infrastructure offering, highlighted by our strong relationship with Water Corporation,” said Valmec Managing Director, Steve Dropulich. 

“We are also buoyed by the project pipeline which is continuing to strengthen due to a strong rebound in the energy services sector. “

In addition to the Water Corp contract, Valmec has also won contracts from Beach Energy and Arrow Energy, which will maintain Valmec’s forward order book at around $75m.

New projects across the resources sector have been driven by strong commodity prices over the past 12 months where Valmec is targeting construction opportunities worth more than $750m. 

With such a strong pipeline of work, particularly in Western Australia, Valmec has seen minimal adverse effects from COVID-19, reporting $112m in revenue for FY20 which was marginally up on the prior year. 

Clients however, have been affected more through the pandemic with supply chain delays pushing project timelines back. This is expected to be reflected in Valmec’s FY21 earnings where the company has forecasted a 20% revenue increase while diversifying beyond the energy sector that it has long specialised in. 

“Increased early contractor involvement (ECI) tendering as well as continuing expansion of our assets services capabilities continue to underpin our expectations of significant earnings growth for FY21,” said Dropulich.