Ausdrill surges on bullish outlook

Shares in mining services business Ausdrill surged on the company’s return to profitability and a bullish outlook on the year ahead.

Perth-based Ausdrill, which made a $175.6 million loss last financial year, announced a reported profit of $58.2 million for FY16, with revenue up 3.3 per cent to $743.9 million.

The profit result was boosted by the company’s sale of its DT HiLoad truck tray manufacturing business and its DTA drill bit manufacturing business during the year.

Profit from continuing operations was also back in the black at $20.2 million.

Earnings before interest, tax, depreciation and amortisation grew 12.7 per cent to $124.9 million.

Ausdrill declared no dividend payouts for the year, but said it expected to resume payouts in FY17 subject to continued improvements in its financial performance.

Managing director Ron Sayers said the company successfully refocused the business on its core activities, reduced costs and won significant contracts with existing and new clients in what remained a challenging environment.

“Ausdrill has emerged in a strong position to grow in our key markets in the years ahead,” he said.

Mr Sayers said the company was of the view that market conditions and margin pressure would persist, but the resources industry could improve over the medium term.

“The gold price in Australian dollars currently favours the Australian production-related mining industry and provides a platform for a stable level of activity in the near-term,” he said.

“However, we believe that near-term growth opportunities are anticipated to come from Africa in particular, where there is a higher rate of tendering activity.

“We are expecting the outlook for the resources industry to improve over the medium term both in Australia and Africa where Ausdrill has a long established presence and local knowhow.

“As a consequence, Ausdrill remains very well placed to take advantage of future opportunities.”

The company is targeting revenue of about $800 million in FY17, with profit from continuing operations foreshadowed to increase by 50 per cent.

Ausdrill shares were 36 per cent higher to $1.63 each at 11:30am.