Alfabs Australia Posts Strong Quarterly Driven by Mining Equipment Hire Division

Alfabs Australia (ASX: AAL) reported a strong business performance for the three months to end June, led by its mining equipment hire division which delivered average daily hire rates of $81,400—0.9% higher than the prior quarter.

Demand remained consistent during the period and the company stayed focused on supporting utilisation rates and forward planning the finalisation and deployment of the Shell major capital expenditure and asset expansion initiative.

Daily hire rates were up 7% on the previous quarter, with heavy equipment and fleet hires previously mobilised to the Dartbrook coal mine being redeployed after the mine went into voluntary administration in mid-2025costing Alfabs $2.8 million in lost revenue.

The company has since recovered by redirecting its mining assets to other major contracts in the region and improving daily hire rates.

Increased Hire Capacity

Alfabs commissioned a continuous miner at the end of June to increase available hire capacity and position itself for future earnings growth.

Customer trials of an AX-10 loader were completed during the period and feedback resulted in minor modifications prior to the start of a 12-month hire this month.

Two driftrunner heavy-duty explosion-protected utility vehicles were completed and are on hire to an underground coal mining customer, with a further two units forward sold.

Market conditions within Alfabs’ engineering division remained subdued, with contracted work-in-hand reducing during the quarter.

While no material contract awards were received, the company continued to actively pursue several government infrastructure and industrial opportunities with a view to extending its tender pipeline.

In the meantime, activity has been supported by smaller fabrication projects and onsite maintenance works including an upgrade to St Mary's train station in suburban Sydney.

Mining Division Restructure

Alfabs has restructured its mining division, transferring its Woollongong workshop activities to a new primary facility at Kurri Kurri to better align capacity with current and anticipated demand.

The company maintains optionality to increase capacity for further growth at Kurri Kurri as required and will maintain a Wollongong presence from a much smaller location for service technicians and critical spares.

The restructure reduced mining workshop numbers by 60% and Alfabs’ total group headcount by 15%, with redundancies completed during the quarter at a cost of $400,000.

Alfabs continued to strengthen its financial position during the quarter, with free cash flow generation and cash conversion in line with expectations.

Net debt at end June was $36.6m compared to $38.9m in the previous quarter, reflecting the first period in which growth capital expenditure associated with the Shell program had been funded entirely from operating cash flow.

The company is in the process of completing a balance sheet review and expects to recognise non-cash impairments of up to $2m on top of mining division restructure costs.