Rinehart juggernaut beats all comers

HANCOCK Prospecting is Western Australia’s largest private company on just about every financial metric, and it leads by a very wide margin.

Gina Rinehart’s juggernaut generated total revenue of $14.6 billion in the 2022 financial year, posted a net profit of $5.8 billion and finished the financial year with total assets of $33 billion.

Hancock’s net profit was more than double that posted by Bunnings owner Wesfarmers, which has traditionally ranked as WA’s largest ASX company.

Hancock’s iron ore subsidiaries account for most of its earnings.

Roy Hill Holdings would rank second on the same metrics if it was counted as a separate business in this feature.

Similarly, Atlas Iron would rank as WA’s fifth most profitable private company if it was counted separately.

Hancock has numerous growth projects, mostly in iron ore, but is also planning to diversify.

It is investing more than $500 million in so-called critical minerals and is looking to spend about $450 million buying Perth Basin gas play Warrego Energy.

Andrew and Nicola Forrest’s Tattarang is ranked as WA’s second largest private company with estimated revenue of $5 billion last year.

It cannot be ranked on other metrics as it does not publish financial accounts.

The Forrests’ wealth comes from their 36 per cent holding in iron ore miner Fortescue Metals Group, so they have used Tattarang to invest in other sectors.

Led by chief executive John Hartman, it made its largest investment late last year, spending $4 billion to buy wind farm developer CWP Renewables. That adds to holdings in areas as diverse as agribusiness, footwear manufacturing, property and hospitality. WA’s third largest private company is a stunning success story.

Online gaming business VGW Holdings has achieved extraordinarily rapid growth in recent years, with its annual revenue hitting $3.5 billion in FY22 and its net profit hitting $454 million.

Specialist mining contractor Byrnecut has a low profile in the wider business community but has quietly grown to be WA’s fourth largest private company.

Its two main operating subsidiaries generated annual revenue of $1.9 billion in the year to December 2021 and posted a combined profit of more than $100 million.

Led by executive chair Steve Coughlan, the Kalgoorlie-founded contractor employs about 5,500 people around the globe.

Another low-profile company that ranks high on the list is CFC Group, which reported a 30 per cent lift in revenue to $926 million last financial year.

Owned by the Cardaci family, details of the group’s financial performance come from annual returns lodged by their holding company, Leone Family Holdings, with the corporate regulator.

CFC is best known for its trucking and logistics company Centurion, which contributes about half the total revenue.

Machinery distribution business CEA is also a big contributor.

CFC’s business operations can be characterised as high turnover and low margin.

Hence, it posted a relatively modest net profit of $24.9 million.

Construction and engineering contractor Georgiou Group is a similar story. With annual revenue of $926 million (coincidentally, the same as CFC), it ranks as one of WA’s largest companies.

Like CFC, however, it posted a modest profit of $22.3 million.

Diversified investment company Perron Group is a very different story.

It is ranked as WA’s 10th largest private company by revenue but even higher on profit; Perron turned in a bumper net profit of $324 million in FY22, ranking it third in the state.

That was the second year running that Perron Group delivered a net profit above $300 million.

The strong FY22 result was attributed to improved trading conditions in the group’s shopping centres and another very strong year for its Toyota vehicle distribution business.

Perron also benefited from higher dividends from listed equities and continued contributions from infrastructure investments, including three airport companies, and mining royalties.

The group is structured as a perpetual endowment but continues to be cautious in passing money to the Stan Perron Charitable Foundation, which paid a total of $20 million to beneficiaries.

Instead, Perron Group used its retained profits to bolster its already strong balance sheet.

It paid down debt, ending the year with net assets of $4.7 billion and just $1.3 billion of liabilities.

WA’s most profitable private companies include two very low-profile family entities.

Wright Prospecting ranks fourth after posting a net profit of $295 million in FY22 on revenue of $431 million.

It is effectively a special purpose company, receiving iron ore royalties from Rio Tinto and distributing that money to the descendants of Peter Wright, including Angela Bennett, Alex Burt and Leonie Baldock.

Wright Prospecting is likely to become much better known in future after Rio Tinto announced plans to jointly develop their Rhodes Ridge iron ore deposit in the Pilbara.

DFD Rhodes is a similar story, with most of its income from iron ore royalties.

It ranks as WA’s fifth most profitable private company with earnings of $82 million, with the proceeds going to the descendant of Pilbara mining pioneer Don Rhodes.

But the past year has shown that big companies are not always profitable companies.

WA’s two largest residential construction companies – Dale Alcock’s ABN Group and the Buckeridge family’s BGC Australia – incurred losses of about $40 million in FY22.

For ABN Group, it was the first loss in the company’s 40-year history.

In both cases, they were hit by the impact of higher material costs, labour shortages and supply disruptions in the booming housing construction market.

BGC’s loss came despite substantial growth in revenue to $1.04 billion.

Ironically, the growth in revenue was a big part of the problem, as it highlighted the overheated conditions in the housing construction market.

It was the first time in nearly a decade that BGC has achieved significant growth.

Its focus has been on downsizing and restructuring since the death of company founder Len Buckeridge in 2014.

In its heyday, BGC was consistently ranked as the state’s largest private company, with its contracting and commercial construction arms lifting total revenue close to $3 billion.

That was also before the emergence of Hancock Prospecting, Tattarang and VGW as even larger companies.