Mining services group Emeco Holdings (EHL) has continued the trend for companies in its sector to report another round of weak results for the year or half year to June 30.
Emeco yesterday revealed its loss had widened in the year to June 30, and directors warned that there was little sign of an improvement in the offing.
While the company talked about how it had cut costs and improved its own operations, the weaker than expected marketplace forced directors to take further impairments – hence the blow out in the overall loss.
The group said its net loss was $225.4 million for the year to June 30, 76.5% down on the 2014-15 result.
That was after a first half loss of $106 million, thanks to an after tax impairment charge of just over $100 million on its Canadian operations..
Emeco’s underlying loss improved 4.6% to $90.5 million as cost cutting by its clients saw revenues fall 14.4% to $206.6 million.
Despite that fall in revenues, Emeco’s own cost cutting saw the group’s operating earnings before interest, tax, depreciation and amortisation (EBITDA) jump 25% to $54.2 million, against its guidance of $53 to $57 million.
First half operating EBITDA was $23.2 million was up 43.2% on the first half of 2014-15.
Emeco said the further impairment charges totalled $179.6 million and CEO, Ian Trestrow said in yesterday’s statement that “The challenging market conditions our business experienced over FY15 continued into FY16.”
“There was no recovery in rental rates as miners remain focused on minimising their operating cost base, however, we improved our operating margins through a strong focus on reducing and eliminating costs,”the CEO said yesterday
“We remain conservative in our approach to capital management and continue to assess opportunities to deleverage the business,” Mr Testrow said.
“We continue to expect consolidation and rationalisation in the sector if there is no recovery over the near-term. Our improved operating performance positions us well to evaluate opportunities to participate in this consolidation.”
The shares fell more than 10% to 0.06 cents.
