Investors took fright yesterday at what was a solid update from mining services company Perenti even though it reinstated earlier guidance lower than previous forecasts.
The shares fell more than 9% at one stage to a month low of $1.215, but then bounced after investors looked deeper into the update and ended down 5.1% at $1.285.
It now forecasts a post-tax profit of between $106 million and $110 million for the 2019-20 year, lower than analyst expectations of $111 million and a lot lower than the original forecast of $115 million and $120 million (which clearly couldn’t be sustained given the impact of the pandemic).
Importantly Perenti (which is the old Ausdrill after its takeover of Barminco in 2019) had good news for shareholders. It will now pay its 3.5 cents a share interim on July 23.
That payment was deferred in an announcement on March 25 and deferred until 20 October.
Perenti has also shelved plans to sell its BTP business, after failing to find a buyer.
The company says the impact of COVID-19 has been “isolated” and it has kept operations going with higher hygiene standards. It has worked closely with governments and airlines to repatriate staff, but successfully completed a crew change across all of the African and Indian operations in June.
Perenti also helped ordinary citizens of the US, UK, and Germany get home.
“The crew change has returned international and regional expats to their homes after extended periods on-site and enabled replacement crews to continue operations,’’ the company told the ASX.
“The cost impact of the rotation has been offset by cost savings achieved as a result of the broader global travel restrictions, which has reduced normal travel expenditure during this period.’’
Perenti said it had strengthened its liquidity and financial position as well.
“This includes Perenti recently securing additional debt funding by increasing the size of its revolving credit facility (RCF) by $130 million, as announced on 15 June 2020. The increase was supported by members of the Company’s existing $400 million RCF, which matures on 1 July 2023, with new credit and covenant terms that are either consistent with, or more favourable, than those in the existing RCF.
“Perenti is in a strong liquidity position with liquidity of circa $530 million comprising cash and undrawn revolving credit facilities,“ the company told the ASX on Tuesday.
