Perenti Limited has reported a substantial beat on its FY25 free cash flow, reaching approximately A$280 million, well above its prior guidance of A$150 million, driven by asset sales and operational efficiencies.
- FY25 free cash flow expected around A$280 million, exceeding guidance
- Asset sales from Barminco Botswana contract contribute A$92 million
- Working capital improvements yield over 95% cash flow conversion
- Net capital expenditure reduced to circa A$300 million
- Leverage ratio improves to 0.5x as of 30 June 2025
Strong Cash Flow Performance
Perenti Limited (ASX, PRN), a diversified mining services group, has announced preliminary unaudited results indicating a free cash flow of approximately A$280 million for FY25. This figure significantly surpasses the company’s previous guidance of more than A$150 million, marking a notable financial milestone for the Perth-based contractor.
Drivers Behind the Upside
The surge in free cash flow is largely attributed to the completion of Barminco’s underground mining contract in Botswana. As part of winding down operations, Perenti realised A$75 million from the sale of property, plant, and equipment, alongside an additional A$17 million from inventory on site. These asset sales alone contributed A$92 million to the cash flow, providing a substantial boost.
Beyond asset disposals, the company also benefited from improved working capital management, achieving a cash flow conversion rate exceeding 95%. Additionally, net capital expenditure was trimmed to around A$300 million, down from the earlier forecast of approximately A$330 million, primarily due to the timing of capital payments.
Balance Sheet Strength and Outlook
Normalising for the one-off asset sales, Perenti’s free cash flow still stands at a robust A$190 million, comfortably above original guidance. This strong cash generation is expected to reduce net debt and improve the company’s leverage ratio to 0.5 times by the end of June 2025, a sign of enhanced financial resilience.
While revenue and EBIT(A) guidance remain unchanged, the company’s leadership expressed confidence in sustaining this momentum. CEO Mark Norwell highlighted the operational excellence and portfolio management that underpin these results, while CFO Michael Ellis emphasised the strengthened balance sheet positioning Perenti well for FY26 and beyond.
Looking Ahead
Perenti plans to release its full audited FY25 financial results and forward outlook commentary in late August, which will provide further clarity on the company’s trajectory. Investors will be watching closely to see how the company leverages this strong cash flow performance amid evolving market conditions.
Bottom Line?
Perenti’s cash flow surge and improved leverage set a solid foundation, but the full audited results will reveal if this momentum can be sustained.
Questions in the middle?
- How sustainable are the free cash flow gains without the one-off asset sales?
- What impact will the improved leverage have on Perenti’s investment and growth plans?
- Will the upcoming full-year results confirm the preliminary financial strength?