More than half of the shareholder equity in engineer Bradken (BKN) has been wiped out in the latest market downturn, as the group struggles to return to the black.
Bradken lost another $216 million in the December half year – thanks to $181 million of write-downs – as it continues to battle to rightsize itself to survive the downturn in mining and resources spending.
Underlying earnings before interest, tax, depreciation and amortisation for the six months ended December 31 fell 28% from a year earlier to $51.9 million.
The company has been hit by the costs of merging four of its businesses, closing under-performing manufacturing facilities here and offshore amid the drop in demand triggered by the commodities slump.
"It has been a trying first half. However, the company remains focused on its strategic intent of generating surplus cash to pay down its debt,” acting managing director Phil Arnall said in yesterday’s statement.
BKN 2Y – Bradken losses widens
In the latest half, job losses were heaviest at Bradken’s China fabrication plant, as it targets a further 10% fall in cash overhead costs by 2017.
Mr Arnall said the group is not looking for any recovery in capital product sales, as it focuses instead on selling more ‘consumable products’.
"Consumable products sales will continue to dominate future operating levels and our plans have no reliance on a resurgence of capital product sales," he said.
The balance sheet remains stretched and it is seeking to reduce net debt to 2.2 times earnings before interest, tax, depreciation and amortisation (EBITDA).
Shareholder equity has fallen to $360.1 million from $765.3 million in mid-2013, with the share price falling from highs of more than $8 to around 48 cents yesterday (down 10% on the day).
The shares jumped on Monday on the news that Bradken had found a new CEO in the shape of Paul Zuckerman, a former senior executive at Fletcher Building, But they lost all those gains yesterday. Zuckerman was chief executive of Fletcher Building’s laminates and panels division, a $1 billion business. He’s also worked for Bluescope and BHP.
