Not surprisingly, Perth-based mining contractor NRW Holdings (NWH) has joined the ever lengthening queue of companies from the sector reporting that its revenue and earnings have taken a hit or two from the slowdown in mining investment.
NRW told the ASX yesterday that its revenues are falling because of contract delays and project deferrals.
As a result, and not surprisingly, the shares took a hit as well, losing 14% to a new 52 week low of 93c before recovering slightly in yesterday’s surprisingly solid market to end on $1.01, a loss of 6.4% on the day.
YTD – NWH Vs COF Vs CDD Vs BLY – NRW joins downgrade club
It joins the like of ALS, Coffey International, Cardno, Worleyparsons, Leighton Holdings, Transfield Services and Boart Longyear in telling the market that the mining investment slowdown had hit their revenue and work flow, and in most cases forced profit margins and projected earnings lower.
The company said net profit in the year to June 30 is now expected to be in the range of $73 million and $76 million, down from $97 million in the previous year.
Projected revenue is now expected to be around $1.3 billion for the 2012-13 year, or more than 13% lower than the $1.4 billion to $1.5 billion estimated in February.
The company said revenue had been impacted by delays in the award of new contracts and the slower than anticipated ramp up of those projects.
"The shortfall in anticipated FY2013 revenue will now flow into FY2014 as the projects referred to progressively scale up," NRW told the market.
"NRW’s current order book remains solid with $1.3 billion of work in hand and submitted tenders of approximately $3.425 billion."
In the forecast in February, NRW indicated it was looking at a profit margin of around 6% for the year.
And Newcrest Mining shares fell another 31c to $12.03 at the close yesterday as investors again doubted the company’s ability to manage its assets.
The fall yesterday at one stage saw the shares dip to a new multi-year low of $11.84. They recovered slightly in stronger trading in the afternoon to end with a loss of more than 2%.
Data out yesterday revealed that one of the company’s major shareholders – First Eagle of New York, had lifted its stake by 10 million shares from mid-May to last Friday, as the company’s shares lost more than 30% of their value.
First Eagle’s stake now sits at 7.32%, up from 6.14%.
More than 4.1 million of the 120 million shares were purchased last week, when Newcrest shares plunged more than 22% from Tuesday to the close on Friday.
