And in a small echo of last week’s update from the embattled McAleese Transport Group, road transport products supplier MaxiTrans yesterday warned of a profit slide of up to 20% for the year to June because of the downturn in activity in the resources sector and the Queensland drought.
While McAleese’s warning was mostly due to its troubled Cootes tanker business, it did point to weaker levels of activity in some parts of the resources sector where it operated.
Yesterday MaxiTrans told the ASX that instead of the forecast $20 million profit for the 2013-14 year, the result would be in the range of $16.5 million to $17.5 million.
CEO Michael Brockhoff said while the domestic market for trailers and vans had ”held up reasonably well”, sales of tippers had not.
He blamed the weakness on the winding down of the mining boom and the Queensland drought.
”Low construction activity continues to have a detrimental impact on demand for tipper products.
"The recent closure of our independent dealer in the Northern Territory is indicative of the current market situation.
"A number of localised issues have also impacted the business including a faster than expected slowdown in the Gladstone market, the location of our single largest Parts store.
"This decline is occurring more rapidly than we expected as resources projects in the region move from a construction phase to an operating phase," Mr Brockhoff said in the statement.
MaxiTrans said its parts business is also weaker and Mr Brockhoff said the because the market had been ”soft”, the company had not been able to pass on cost increases from a fall in the Australian dollar fast enough.
MXI YTD – MaxiTrans slips on declining mining
The company though was confident about prospects for 2014-15.
"We expect that our accretive acquisitions in NSW during the year (Dubbo, Wagga and Central Coast) together with our greenfields stores in Sydney, Mackay and Darwin will go some way to ameliorate the Gladstone store shortfall in FY15.
"Additionally, there has been a delay in re-introducing a third party core product that had been temporarily withdrawn from the market for quality reasons earlier in FY14, which will adversely impact the projected performance of the Parts business for the remainder of FY14. At this stage, we believe that this product will be back in the market in Q1FY15," the company said.
The downgrade saw the shares plunge more than 18% to 95.5c. It was yet another big thumbs down from disgruntled investors to a company delivering surprise bad news.
