Perenti’s Reduced Leverage and Rising Dividends Signal Growth but Risks Remain
Perenti Limited has reported record financial results for FY25, highlighted by revenue growth, improved margins, and a significant reduction in leverage. The company’s robust free cash flow and increased dividends set a solid foundation for future growth.
- Record FY25 revenue of $3.49 billion and underlying EBIT(A) of $333 million
- Leverage reduced to 0.5x, enhancing balance sheet strength
- Free cash flow reached a record $286 million, adjusted $195 million
- Dividends increased to 7.25 cents per share with a 4.25 cents final dividend
- Strong work in hand of $6.5 billion and pipeline of $17.4 billion across key regions
Robust Financial Performance
Perenti Limited has announced its FY25 results, marking a year of record-breaking financial achievements. The company reported revenue of $3.49 billion, a 4% increase from FY24, alongside an underlying EBIT(A) of $333 million, up 6%. These gains were supported by improved operational efficiencies, reflected in an EBIT(A) margin increase to 9.6% from 9.4% the previous year.
Underlying net profit after tax (NPAT) rose to $178 million, with earnings per share (EPS) modestly increasing to 19.1 cents. The company’s disciplined cost control and strategic project execution contributed to these solid results, despite challenges in certain regions.
Balance Sheet Strength and Cash Flow
Perenti’s balance sheet showed marked improvement, with leverage reduced to 0.5x from 0.7x in FY24, well below initial guidance. This reduction was driven by strong free cash flow generation, which reached a record $286 million. Adjusted for the sale of equipment and inventory related to the exit from the Botswana underground project, free cash flow still stood at a record $195 million.
The company maintained a healthy cash balance of $481 million and liquidity of $850 million, supported by undrawn syndicated debt facilities. These factors provide Perenti with significant financial flexibility to pursue growth opportunities and manage market uncertainties.
Operational Highlights Across Divisions
Contract Mining, representing 72% of group revenue, delivered consistent performance despite a transition in project mix. The division’s earnings remained stable, offsetting underperformance in Botswana with scale advantages.
Drilling Services, boosted by the full-year contribution from the DDH1 acquisition, posted a 30% revenue increase to $778 million and a 66% jump in EBIT(A) to $84 million. This division now ranks among the top three drilling companies globally, with strong utilisation in gold and copper projects and capacity for further growth.
Mining and Technology Services showed signs of recovery after a challenging first half, with improved second-half performance. The division continues to develop innovative products such as the idoba underground mine simulation tool, positioning it for future growth.
Strategic Outlook and Capital Allocation
Perenti’s work in hand increased to $6.5 billion, reflecting successful contract wins and extensions including projects at Mana, Obuasi, Agnew, Great Fingall, and Goldrush. The pipeline remains robust at $17.4 billion, spanning Australia, Africa, and North America.
The company’s capital allocation framework balances debt reduction, dividends, share buybacks, and business growth investments. FY25 dividends rose 21% to 7.25 cents per share, with a payout ratio of 38%. Share buybacks continued, with over 75 million shares repurchased since FY22.
Looking ahead, FY26 guidance anticipates revenue between $3.45 billion and $3.65 billion, EBIT(A) around $340 million, and free cash flow exceeding $160 million. The company expects earnings and cash flow to remain second-half weighted, underpinned by ongoing safety initiatives, operational excellence, and disciplined capital management.
Bottom Line?
Perenti’s record FY25 performance and strengthened balance sheet position it well for sustained growth, but execution on its robust pipeline will be key to maintaining momentum.
Questions in the middle?
- How will Perenti manage risks associated with the exit from the Botswana underground project in FY26?
- What inorganic growth opportunities might Perenti pursue given its strong balance sheet and cash flow?
- How will exploration drilling activity trends impact the Drilling Services division’s growth trajectory?