Despite some nasty red ink, directors of Ausdrill (ASL) have attempted to keep faith with investors by declaring a one cent a share interim dividend for the six months to December.
The mining services company revealed more job cuts and a $177 million loss, amid hopes the weaker Australia dollar will help revive the local gold sector and bring more work.
The one cent a share interim payout is well down on the 2.5 cents a share paid for the first half of 2013-14.
Ausdrill said the mining investment downturn led to $197 million in write-downs on its drilling and associated equipment which caused the massive half year loss.
The write downs had been previously forecast by the company.
Earnings were affected by the ending of work in the iron ore sector, delays in booking work in the energy drilling sector, the deferral of mining at the Syama project in Africa and continued underperformance of its exploration and equipment hire businesses.
Earnings before interest, tax, depreciation and amortisation fell 37% to $59.1 million.
Ausdrill’s EBITDA margin was cut from 22.2% to 14.3%.
ASL 1Y – Ausdrill pays interim dividend despite red ink
Like so many other companies in the mining services sector, it is being hit by falling revenues, falling profit margins as the company can’t cut costs fast enough.
Macmahon Holdings is another company this week to be impacted by these factors, but it has also been hit by the loss of its biggest contract, which will force a new round of cuts on the company.
If the lower dollar doesn’t spark a rebound in the local gold industry, then the likes of Ausdrill will also be facing renewed pressures to cut costs.
The company says that between 25 and 30% of its assets are now idle, meaning revue is up to $400 million lower than it currently is.
Sales revenue eased 2% to $414 million in the December half, while operating profit rose 4% to $20 million.
Ausdrill shares ended up one cent at 40 cents, a rise of 2.6%.
