GR Engineering shares slide on revenue hit from BHP suspension
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More news: Shares in GR Engineering were down 5.2% to $2 after the contractor said its revenues from design and construction works at BHP’s West Musgrave operations would be $80 million lower than expected in FY25. This was due to the mining giant's decision to suspend nickel operations in Western Australia.
GR noted there would be no impact to its revenue and EBITDA guidance for FY24.
Shares in Alliance Aviation were up 2.6% to $3.16 after the fly-in-fly-out services operator said it would reallocate capacity to other customers in WA and Queensland but would still expect earnings to be lower by $3 million to $4 million in FY25 and by $5 million in FY26 as a result of BHP’s decision.
Alliance Aviation, GR Engineering flag hits due to BHP suspension
The news: Fly-in-fly-out services operator Alliance Aviation and contractor GR Engineering Services have outlined hits to revenue and earnings following mining giant BHP’s decision to suspend nickel operations in Western Australia.
The numbers: Alliance, which currently operates 24 round trips per week for BHP Nickel West between Perth-Mt Keith and Perth-Leinster, expects earnings to be lower by $3 million to $4 million in FY25 and by $5 million in FY26 as a result of BHP’s decision.
GR Engineering, which is engaged in the design and construction works at BHP’s West Musgrave operations, said it expects project revenue to be lower than expected by $80 million in FY25.
The context: Alliance said its services for BHP Nickel West occupy two Fokker 100 aircraft full time, operating 3,140 hours a year in total. It said the surplus capacity will be reallocated to existing and new customers in WA and Queensland to ensure there is minimal net impact on earnings going forward.
GR said a transition period will start at West Musgrave later in July, with handover to be completed in December.
BHP announced late on Thursday that it would temporarily suspend Nickel West and West Musgrave project operations from October 2024 due to an oversupply in the global nickel market. The decision will be reviewed by February 2027.
What they said: "In the meantime, Alliance will work with BHP Nickel West in a flexible and supportive manner as would be expected from the long-term relationship both companies have enjoyed since 2006,” Alliance said in a statement.
The sources: ASX announcement, ASX announcement
