The definitive engineering & construction reporting season summary

As part of our latest monthly analysis of the Engineering & Construction (E&C) sector, a definitive reporting season summary has been completed, which includes a result analysis, and summary of important financial information, across the 19 companies included in our Bell Potter Engineering & Construction (BP E&C) Index (the index is intended to simply provide a reference point for sector wide share price performance).

More generally across the E&C and Building sectors, significant COVID impacts were seen in the form of productivity declines, supply chain issues, difficulties in moving workers between sites, and the delay and deferral of new workloads. Those that were primarily exposed to Utility workloads saw similar issues, but generally to a lesser extent.

E&C firms that also have significant Mining Services exposure saw material benefits during FY20. This came on the back of Mining Services revenues and margins remaining solid, with the Australian Mining sector seeing little disruption to operations, and miners continuing to focus on maintaining/growing output in light of commodity prices that have generally proven resilient.

After falling significantly since the beginning of the year, the BP E&C Index rose by 8.2% in August – an important positive move on the back of reporting season. Despite this positive monthly variance, the index remains 34.7% below where it began 2020.

On the proviso of a continued global economic re-opening and commodity prices remaining resilient, company’s exposed to the Mining sector, either in an E&C or Mining Services sense, should see significant levels of opportunity in FY21. Solid infrastructure investment should continue to also provide opportunities for those with Civil Infrastructure exposure.

For more information, please see the attached report, where you will find a summary of each company’s result, broken down into the Good, Bad, and the Notable, as well as summaries of key financial information.

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