Macmahon Cuts Debt, Raises Dividend Amid Market Uncertainties
Macmahon Holdings has posted record FY25 results, buoyed by Decmil integration and strong mining contract wins, while raising its FY26 revenue and earnings guidance.
- FY25 revenue climbs 20% to $2.4 billion
- Underlying EBIT(A) jumps 22% to $171.4 million
- Net debt reduced to $162.5 million post-Decmil acquisition
- Order book stands at $5.4 billion with $24.2 billion tender pipeline
- FY26 guidance raised – revenue $2.6–2.8 billion, EBIT(A) $180–195 million
Record Financial Performance
Macmahon Holdings Limited (ASX, MAH) has delivered a standout financial year for FY25, reporting record revenue of $2.4 billion, a 20% increase on the previous year. This growth was underpinned by the successful integration of its recent Decmil acquisition and robust contract wins across its surface and underground mining divisions. Underlying earnings before interest and tax (EBIT(A)) surged 22% to $171.4 million, surpassing market expectations and marking the ninth consecutive year the company has met or exceeded guidance.
Statutory net profit after tax (NPAT) also rose sharply by 39% to $73.9 million, reflecting strong operational execution and improved cost management. The company’s underlying EBITDA margin remained healthy at 16%, supported by renegotiated contracts and organic growth.
Debt Reduction and Cash Flow Strength
Macmahon’s free cash flow generation nearly doubled to $140.7 million, enabling a significant reduction in net debt to $162.5 million, down from $236.9 million at mid-year. This deleveraging brings the company’s gearing ratio to a conservative 19%, restoring balance sheet strength to pre-Decmil acquisition levels. With $538 million in available liquidity, including $264 million in cash, Macmahon is well-positioned to fund future growth opportunities.
Contract Wins and Business Diversification
The company secured over $2 billion in new mining contracts during FY25, including major wins in Indonesia and Australia. Notable contracts include a $900 million extension at Byerwen and a $317 million interim contract at the Poboya gold project. The underground mining segment is targeting over 50% growth in the next two years, supported by strategic extensions at key Australian sites such as Olympic Dam and Fosterville.
Meanwhile, the civil infrastructure business, bolstered by Decmil’s acquisition, contributed $437 million in revenue and added approximately $400 million in new civil contracts. This diversification into civil projects such as mine site accommodation, roads, dams, and wind farms is central to Macmahon’s strategy to reduce capital intensity and increase cash-backed earnings.
Outlook and Dividend Growth
Looking ahead, Macmahon has raised its FY26 guidance, forecasting revenue between $2.6 billion and $2.8 billion and underlying EBIT(A) of $180 million to $195 million. The company’s order book remains robust at $5.4 billion, supported by a substantial $24.2 billion tender pipeline. Despite macroeconomic uncertainties and commodity price volatility, Macmahon’s exposure to gold, copper, iron ore, and coal positions it well to capitalize on ongoing demand.
Reflecting confidence in future earnings, the board declared a final fully franked dividend of 0.95 cents per share, bringing the total FY25 dividend to 1.50 cents per share, a 43% increase from FY24. The company plans to increase its dividend payout ratio from 20–35% to 30–45% of underlying earnings per share starting FY26.
Bottom Line?
Macmahon’s record FY25 performance and strengthened balance sheet set the stage for ambitious growth amid a challenging global mining landscape.
Questions in the middle?
- How will Macmahon manage margin pressures amid commodity price volatility?
- What impact will the expanded civil infrastructure segment have on long-term profitability?
- Can Macmahon sustain its strong contract win momentum into FY27 and beyond?
