NRW Holdings shares slump over Whyalla debt risk
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The news: Shares in NRW Holdings tumbled in early trading after the construction and mining contractor flagged debt from the OneSteel administration, but lifted revenue outlook.
The numbers: The company said late on Friday net profit for the six months to December 2024 was nearly steady at $58.4 million.
While revenue was up 16% to $1.65 billion, the company outlined trade receivables of $113.3 million from the Whyalla-based OneSteel, which was placed in administration last month.
NRW shares were down more than 8% at $3.09 on the ASX, after resuming trading following a trading halt last week.
The context: NRW said it has a guarantee and indemnity, as well as a first ranking security over certain assets against the debt. It also has various options regarding enforcement of the security and will make a decision on the path forward. It has not recognised any financial impact in the half-year accounts.
The company also raised its guidance for full-year revenue to be between $3.2 billion and $3.3 billion, from $3.1 billion previously. It expects earnings to be unchanged in the $205 million to $215 million range.
Citi analysts said NRW delivered a solid result considering the "myriad of issues" it had to navigate during and post the first-half. Citi has a 'buy' rating on the stock and a target price of $4.05.
What they said: "Miss at EBITA is largely driven by higher-than-expected D&A with the uplift attributed to HSE fleet acquisition at South Walker Creek as well as weaker-than-expect mining margin. Looking ahead, NRW remains upbeat," Citi analysts said.
"... While a guarantee and first ranking security provide some comfort around recovery of receivables at Whyalla, we think lingering uncertainty is likely to weigh on shares and remains an overhang for now. Having said that, we remain upbeat on near-term NRW's growth trajectory."
The source: ASX
