Lycopodium (ASX:LYL) told investors its first-half performance met profit expectations and management continues to see robust demand for the group’s engineering and project delivery services, despite timing delays on two major prospects that prompted a revision to full-year revenue guidance.
Financial results and dividend
In its first-half investor presentation, Lycopodium reported revenue of AUD 174.5 million and net profit after tax (NPAT) of AUD 18.3 million. Management said the result represented a 10.5% NPAT margin and was “in line with our expectations,” adding that the company achieved its NPAT target.
Order book, pipeline, and project activity
Lycopodium reiterated its positioning as a project-focused business that aims to participate across the full lifecycle of client projects—starting with scoping and feasibility work and extending through engineering, delivery, and later-stage optimization and expansion.
Management said the group is maintaining a high workload, with:
- Committed contracts valued at AUD 415 million, up from the prior period
- A revenue opportunity pipeline of AUD 1.3 billion, also up from the prior period
Operationally, Lycopodium highlighted several recently awarded front-end engineering and design (FEED) assignments that it expects will position the company for later execution phases. Examples cited included:
- Winu Copper Project for Rio Tinto
- Asutlo Divibango Gold Project for Devon Mining
- Doropo Gold Project for Resolute
- Pilgangoora plant expansion lithium project in Western Australia
The company also said it has started initial work on two “material prospects”: the Tulikangi Gold Project and the Blackwater Expansion Phase 1A project for Atlas Gold. Management noted it hopes to transition into a larger Blackwater expansion scope and said it was awaiting news that it believed “may be imminent.”
Project timing shifts impact forecasts
Management said a “shift to the right” in project timing—particularly on Tulikangi and Blackwater—had moved expected start timing by roughly three to four months compared with prior forecasts and had impacted financials and projections.
On the Q&A, management emphasized that while Lycopodium can influence project readiness by delivering high-quality study work, it does not control when projects receive funding, permitting, and final approvals. The company described these factors as key drivers of schedule slippage.
When asked whether the delays had created incremental costs, management said the impact is primarily seen through personnel utilization. Lower utilization can erode profitability if staff are carried ahead of work commencing, although the company noted it was still running above its target utilization overall in the period discussed.
Utilization, hiring, and capacity expansion
Lycopodium said it continues to invest in people and capacity amid competitive labor markets in key hubs, including Australia, Canada, and South Africa. Management described a global shortage of high-quality, experienced personnel and said the company made a deliberate choice to maintain capacity rather than reduce headcount during softer utilization periods, particularly in Cape Town.
Management said utilization was “reasonably high” in the first quarter of the financial year and softened in the second quarter. It said APAC and the Americas were running at fairly high utilization levels, while Africa, the process industries business in China, and Saxum were lower. The company expects utilization to increase through the second half (Q3 and Q4) and said forecasts point to improving utilization into FY2027 as well, alongside higher headcount over time.
The company also said it has planned to increase capacity over a 12-month period in several locations, including Perth, Toronto, Cape Town, Lima, and Manila, with management indicating these investments are intended to support both a strong second half and growth in subsequent financial years.
Guidance revised; Americas strategy and Saxum update
Lycopodium revised full-year guidance “primarily due to the shift right” of major prospects expected to contribute materially. The company now guides to:
- Group revenue of AUD 370 million to AUD 410 million
- EBIT of AUD 37 million to AUD 41 million
Management said this remains in line with its targeted EBIT expectation of around 10% and added it expects a strong second half to achieve the updated range.
On geographic expansion, management said Europe is not a focus due to limited mineral activity, but the Middle East remains on its radar. Lycopodium noted it is currently working on a project in Oman and has established an entity in Dubai that could be activated if opportunities warrant.
Management also discussed its Americas expansion and provided an update on Saxum, saying Saxum’s standalone performance has been slower than hoped, particularly due to softness in its traditional cement market. However, management reiterated that the strategic rationale for acquiring Saxum was to establish a “beachhead” in Latin America and access new clients and opportunities. As examples, it cited Saxum securing a pre-feasibility study (PFS) for Unico Silver in Argentina and said the group is pursuing a large copper concentrator opportunity in Argentina enabled by its presence in the region.
In closing remarks, management said it remains happy with business performance and described the balance sheet as strong, while acknowledging that project timing remains a recurring variable in the company’s operating environment.
About Lycopodium (ASX:LYL)
Lycopodium Limited provides engineering and project delivery services in the resources, infrastructure, and industrial processes sectors. It operates through four segments: Mineral, Process Industries, Project Services-Africa, and Others. The company provides engineering and related services to junior exploration companies, multinational producers, and manufacturing and renewable energy facilities; project management, construction management, and commissioning services to the extractive mining industry; and asset management, engineering, architectural, and project delivery services to a range of private and public clients.
