Civmec (ASX: CVL) has closed out FY26 with higher revenue, stronger margins and a substantial pipeline of contracted work, giving the engineering and construction group a solid base heading into the new financial year.

The company, which delivers heavy engineering, construction and shipbuilding work from its integrated facility at Henderson south of Perth, reported revenue of $903 million, an 11.4% increase on FY25, while EBITDA climbed 17% to $107.3 million. Net profit after tax rose 22.5% to $52.1 million, with the net profit margin reaching 5.8%.

The stronger earnings result has also supported an increased return to shareholders. Civmec declared a fully franked final dividend of 3.5 cents per share, taking total FY26 dividends to 6 cents per share.

A major feature of the result is the company's contracted workload. Civmec had an order book of $1.4 billion at July 31, 2026, supported by new project awards across resources, energy and infrastructure. Among the significant wins were major SMPE&I packages — structural, mechanical, piping, electrical and instrumentation work — for Iluka Resources and work associated with the Perth Sporting and Entertainment Precinct.

The growing order book gives Civmec visibility as it enters FY27, while the company's tendering pipeline provides scope for further contract growth. Contracted backlog is a closely watched metric for engineering groups because it indicates revenue that is largely secured ahead of delivery.

Civmec is also broadening its exposure beyond its established resources and infrastructure operations. The company has established Civmec Defence Industries as a prime contractor to the Commonwealth, creating a platform for expansion in the defence sector. The move aligns Civmec with Australia's planned ramp-up in defence spending, including the long-term nuclear-powered submarine program under AUKUS and the continuous naval shipbuilding pipeline, which are expected to generate sustained demand for industrial capacity at shipyards such as Henderson.

The strategy gives the company exposure to several areas of infrastructure spending rather than leaving it dependent on a single market. Resources and energy remain important sources of work, while defence, public infrastructure and shipbuilding provide additional avenues for expansion.

Chief executive Patrick Tallon said the FY26 performance reflected the company's ability to execute projects while expanding into new areas, with the group entering FY27 with a sizeable order book and a strong pipeline.

The expansion into defence could become an increasingly important part of the longer term picture. Establishing itself as a Commonwealth prime contractor gives Civmec an opportunity to participate in a sector where government spending is expected to create substantial project opportunities. How quickly that pipeline converts into contracted work, alongside conversion of the existing tender pipeline across resources and infrastructure, will shape the group's trajectory into FY27 and beyond.