NRW Holdings Happily Says Goodbye To FY25

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After a rough FY25 beset with many issues beyond the company's control, mining contractor NRW Holdings looks forward to a solid FY26.

-NRW Holdings’ FY25 hit by weather and customer problems
-Company achieved a solid performance considering
-FY26 shaping up to see improvement across all divisions
-Analysts confident in the outlook

By Greg Peel

FY25 was a tough year for mining sector contractor NRW Holdings ((NWH)). For starters, when the South Australian government placed Sanjeev Gupta’s OneSteel Manufacturing into administration, it voided the lease arrangement at the Port of Whyalla, forcing NRW to take a -$77m impairment.

A further impairment was taken when mineral sands miner Strandline Resources ((STA)) went into administration.

Unusually wet weather in Queensland upended coal mining, Arcadium Lithium, now owned by Rio Tinto ((RIO)), put its Mt Cattlin lithium mine into care & maintenance due to low prices, and there was a reduction of scope at Coronado Global Resources’ ((CRN)) Curragh coal mine, all of which impacted on NRW’s contracts.

Yet, despite the turmoil and the many set backs, NRW still managed to post an FY25 core profit that was positive on growth, and largely in line with consensus, when the result included -$132m of trade receivable and contract asset impairments, the majority of which related to OneSteel and Strandline. With this issue now largely reflected in financial statements, the market can move on to focus on the underlying operating performance of the business, Jarden suggests, which remains strong.

It’s back to business in FY26, assuming, that is, the weather behaves itself.

Solid Outlook

NRW’s FY25 revenue was up 12% year on year and earnings up 20%. Divisionally, there were the usual swings and roundabouts.

The Civil division was up 48% on a healthy margin of 5.4%, while Minerals, Energy & Technologies (MET) provided key positive surprise, delivering a 50% increase on margins of 7.3%. The margin in MET increased by more than 260bps from 6.0% in first half to 8.6% in the second, Morgans points out.

Mining was weak in delivering 11% growth on a 7.9% margin. Mining revenue was only up 2% despite adding the HSE mining equipment business ($250m in revenue), hence organic mining revenue fell considerably as a result of weather but also churn in the portfolio.

Mining should benefit in FY26 from a return to more normal weather conditions, Evolution Mining’s ((EVN)) fully ramped Mungari gold mine, and an expanded works program at Stanmore Resources’ ((SMR)) South Walker Creek.

Meanwhile, NRW’s Civil revenue is highly correlated with Rio Tinto’s ((RIO)) Pilbara replacement cycle, Morgans notes. Over 2025-27, Rio expects to invest more than US$13bn on new mines, plant and equipment in the region.

Rio’s sustaining and decarbonisation spend is estimated to be US$5bn on average in 2026-27, while average Pilbara replacement spend of US$2.9bn in 2026-27 is nearly three times the replacement spend in 2024-25.

In this replacement cycle, NRW will capture more of the capex value chain, Morgans notes, given it’s added engineering capabilities through the acquisition of Primero in 2021. This is already taking place, with Primero awarded a material ($260m) non-process infrastructure contract at Rio’s Hope Downs project.

Concerns about wet weather and customer issues within NRW’s coal operations are largely behind the company, in Jarden’s view, with the outlook remaining strong. Earnings margins have likely troughed and should hold around 7% levels through FY26 based on Jarden’s forecasts, assuming no material adverse weather/customer events.

The order book remains strong ($4.2bn), as do active tenders ($2.9bn). Jarden looks for this to convert into work over the course of FY26. Additional margin upside could come from improving labour productivity and performance, although availability of specialised trades still remains constrained.

FY26 guidance is for revenue growth to exceed $3.4bn and for underlying earnings to range from $218m to $228m. Current work-in-hand covers some 88% of the forecast revenue for FY26, NRW’s strongest starting position since FY21 (89%), providing confidence for investors in the outlook at this early stage.

Analysts Confident

UBS views NRW’s FY26 guidance as a solid starting point and forecasts 8% year on year earnings growth. Growth is being supported by solid tailwinds across NRW’s Resource capex/production linked end-markets. The company’s natural operating leverage sees this convert to FY26 earnings per share growth of 14%.

With the stock trading at an undemanding one-year forward PE multiple of 12x and free cash flow yield of 7%, UBS reiterates its Buy rating.

Citi also retains Buy, encouraged by a meaningful step change in MET margin and persevering multi-year top-line visibility.

Though NRW has a large capital-intensive contract mining business, it is well diversified with its legacy civil construction business, as well as its more recently formed engineering business, Morgans notes.

FY25 was a tumultuous year but going forward, each business has significant tailwinds driven from Rio’s iron Pilbara capex program (Civil and MET), improved weather (Mining), and potential for additional profit realisation at Northern Star Resources’ ((NST)) Fimiston expansion project (MET) given the contract compensation structure.

Morgans retains Buy.

Macquarie has increased its valuation multiple to 8.5x from 7.0x prior to reflect a broader sector re-rating over the last 12 months, driven by the solid earnings outlook, consistency of earnings, and an ongoing focus and execution of generating free cash flow and delivering returns for shareholders via buybacks and dividends.

NRW has traded between a 7-9x multiple over June 2022 to July 2025 so Macquarie sees its 8.5x multiple as not stretched, particularly given the outlook for robust earnings growth with potential upside from new contract awards, improvement in mining segment margins, and potential profit release from Fimiston.

If NRW continues to deliver strong earnings growth, there is potential for a re-rate beyond 8.5x, Macquarie suggests, yet without qualification, Macquarie sticks with its Neutral rating.

Jarden retains Overweight (that’s one rung below Buy), while Canaccord Genuity is on Buy.

Since hitting its lows in April 2025, NWR’s share price has regained most of its losses as investors gained clarity around the Whyalla impairment and Coronado risk exposure, Canaccord notes.

Management was quick to quell concerns about coal, reminding the market the South Walker Creek contract commences from January 2026 onwards at a $300m-plus annualised revenue run-rate.

Easing weather conditions are a further upside risk to Mining. MET margins appear to be resilient, and Canaccord sees potential for a balloon payment around Fimiston, while the Civil pipeline is robust with demand in both iron ore work and housing/infrastructure. This confluence of factors underpins Canaccord’s positive view on the stock.

Moelis is also on Buy, noting secured work 88% of FY26 guidance underpins continued top line growth over FY25 with margin improvement in Civil and MET to be complemented by margin recovery in Mining. Continued momentum in contract awards and demonstration of margin recovery represent positive catalysts for the stock, Moelis suggests.

The four brokers monitored daily by FNArena covering NRW Holdings (three Buy or equivalent, one Hold) have lifted their consensus price target to $4.05 from $3.40 post the FY25 result.

Jarden’s new target is $3.60, Canaccord’s $3.99 and Moelis’ $4.07.

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