Millennium Services Group Ltd - Gross Margin Pressures Offset Slightly by Higher Revenue
SUMMARY
- Millennium Services Group Ltd (ASX:MIL) has provided an update on Q4 FY23 revenue, cash flow from operating activities, and the H2 FY23 gross margin. MIL delivered 8.0% (RaaS 9.6%) revenue growth in Q4 FY23 and 2.0% over FY23 on the back of new contract wins and wage inflation. Q4 FY23 cash flow turned positive with the group ending FY23 with just $1.2m net debt.
- The H2 FY23 GP% came in below implied guidance and RaaS estimates at 14.4% against ~15.9% forecast, attributed to wage pressure in a tight labour market.
- While most contracts have an annual contract adjustment clause for wage increases, the timing and magnitude of recent award increases is proving difficult to manage.
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