Ventia Boosts FY25 Guidance Amid Record $20.6B Contract Wins
Ventia Services Group has upgraded its FY25 profit guidance following a strong first half marked by record contract wins and an expanded share buyback program.
- 11.9% increase in NPATA to $119.4 million in H1 FY25
- Record work in hand reaches $20.6 billion, up 19.4%
- FY25 underlying NPATA growth guidance raised to 10-12%
- On-market buyback program increased by $50 million to $150 million
- EBITDA margin expands to 8.3% despite 1.5% revenue decline
Strong First Half Performance
Ventia Services Group Limited has reported a robust first half for FY25, with underlying NPATA rising 11.9% to $119.4 million and EBITDA increasing by 2.8% to $252.6 million. This growth was achieved despite a slight 1.5% dip in revenue to $3.0 billion, reflecting the company's strategic pivot towards higher-margin contracts.
The company’s EBITDA margin expanded to 8.3%, underscoring improved operational efficiency and a focus on more profitable work streams. Managing Director and CEO Dean Banks highlighted that lower depreciation and amortisation, combined with higher interest income, contributed positively to the bottom line.
Record Contract Wins and Sector Highlights
Ventia’s work in hand surged by 19.4% to a record $20.6 billion, driven by $4.3 billion in new contract awards during the half. Telecommunications was a standout sector, with significant contract wins from major players like Telstra and nbn underpinning future growth prospects. The company also extended its Defence Base Services agreement through to January 2026, reinforcing its foothold in that sector.
Infrastructure Services saw a 9.6% revenue increase, fueled by a strategic shift towards energy and water contracts, which delivered a 21.4% jump in EBITDA. Conversely, Defence and Social Infrastructure revenue declined 6.0%, though margins improved due to a focus on higher-margin work. Transport revenues and earnings were lower, reflecting the completion of prior projects, but a strong pipeline promises recovery in the second half.
Capital Management and Shareholder Returns
Ventia demonstrated disciplined capital management, boosting operating cash flow conversion to 93.2% and maintaining a healthy net debt to EBITDA ratio of 1.1x. The company has executed 82.5% of its initial $100 million buyback program and announced an increase of $50 million, bringing the total buyback to $150 million for 2025. This move signals confidence in the company’s financial position and outlook.
An interim dividend of 10.71 cents per share was declared, representing a 14.5% increase year-on-year and a 75% payout ratio of NPATA. The dividend is 90% franked and payable in October, reinforcing Ventia’s commitment to returning value to shareholders.
Safety and Outlook
Safety metrics improved with an 8.7% reduction in the Total Recordable Injury Frequency Rate, reflecting ongoing efforts in injury prevention and management. While the Significant Injury Frequency Rate saw a slight uptick, it remains low by industry standards.
Looking ahead, Ventia reaffirmed its FY25 guidance for underlying NPATA growth of 10-12%, buoyed by a diversified portfolio and a strong pipeline of opportunities. The company’s strategic focus on higher-margin sectors and contract renewals positions it well for sustainable long-term growth.
Bottom Line?
Ventia’s upgraded guidance and expanded buyback underscore confidence, but execution in the second half will be key to sustaining momentum.
Questions in the middle?
- How will the mobilisation costs in Telecommunications contracts impact second-half profitability?
- What are the risks associated with the slower revenue growth despite rising earnings?
- How might the expanded buyback program influence Ventia’s capital flexibility amid market uncertainties?
