MLG Posts 20.5% Revenue Surge Amid Profit Margin Pressures
MLG Oz Limited reported a robust 20.5% increase in revenue for the first half of FY2025, reaching $272.9 million, even as net profit after tax declined to $4.1 million. The company anticipates stronger growth in the second half, supported by new contracts and fleet expansion.
- Revenue up 20.5% to $272.9 million in HY2025
- Net profit after tax down 42.7% to $4.1 million
- Significant capital expenditure of $29.2 million on new equipment
- Crushing and screening revenue declined 41.1%, impacting margins
- Strong second half outlook driven by new contracts and fleet deployment
Strong Revenue Growth Amid Profit Challenges
MLG Oz Limited (ASX: MLG) has delivered a compelling first half performance for FY2025, with statutory revenue climbing 20.5% to $272.9 million compared to the prior corresponding period. This growth underscores the company’s entrenched position in the Western Australian mining services sector, particularly within the gold industry, which continues to benefit from historically high gold prices.
However, the headline revenue increase belies a more nuanced profitability picture. Net profit after tax (NPAT) fell sharply by 42.7% to $4.1 million, down from $7.1 million in HY2024. This decline reflects a combination of factors including higher depreciation costs following substantial capital investment, and a significant drop in revenue from the higher-margin crushing and screening segment.
Capital Investment and Operational Dynamics
MLG’s capital expenditure reached $29.2 million in new equipment, signaling a strategic commitment to expanding fleet capacity. This investment aims to position the company for anticipated growth as new contracts come online. Additionally, the purchase of a dedicated accommodation facility in Kalgoorlie for $3.5 million is expected to reduce operational costs by replacing rented housing, reflecting a focus on long-term efficiency gains.
Despite these investments, operational challenges have constrained margin expansion. The crushing and screening business saw revenues decline by 41.1% to $21.9 million, primarily due to the completion of major projects such as Bald Hill and Koolan Island, with new projects delayed. Given that crushing and screening typically commands higher margins, this segment’s underperformance weighed heavily on overall profitability.
Market Conditions and Client Demand
MLG’s core mine site services and bulk haulage segment grew revenues by 32.7% to $246.7 million, driven by organic volume increases and contractual rate adjustments. The company has also been proactive in managing operational costs amid labour market constraints, particularly for skilled roles such as road train operators and diesel mechanics, through targeted recruitment and training programs.
Weather disruptions, including unseasonal rain events, have intermittently impacted operations, but MLG has mitigated some effects through improved contract coverage and operational planning. The company’s integrated service model remains well-positioned to capitalize on ongoing demand for ore processing support across gold and other base metals.
Outlook: Optimism Tempered by Execution Risks
Looking ahead, MLG expects a stronger second half of FY2025, supported by recent contract wins and the deployment of new fleet capacity. The company anticipates growth in its crushing and screening business as new projects commence, which should help improve profit margins. Capital expenditure is forecast to slow, reflecting the heavy investment phase now largely complete.
Managing Director Murray Leahy highlighted the company’s confidence in leveraging its market position and integrated services to drive further profitability gains. Yet, the timing of project commencements and ongoing operational cost pressures remain key variables to watch as MLG navigates the remainder of the financial year.
Bottom Line?
MLG’s strong revenue momentum sets the stage for a pivotal second half, but profit margin recovery hinges on fleet deployment and project timing.
Questions in the middle?
- How quickly will new crushing and screening projects ramp up to restore higher margins?
- What impact will labour market constraints have on operational efficiency and costs?
- Can MLG sustain revenue growth while managing depreciation and fixed costs effectively?
