After a solid start to the financial year, mining equipment supplier Emeco Holdings has posted a $107.2 million half-year loss as a result of impairments to its Canadian business.
After a solid start to the financial year, mining equipment supplier Emeco Holdings has posted a $107.2 million half-year loss as a result of impairments to its Canadian business.
Perth-based Emeco’s loss widened from a $52.1 million loss recorded in the previous corresponding period, with revenue down 1.4 per cent to $109.1 million.
Earnings before interest, tax, depreciation and amortisation rose 43.2 per cent to $23.2 million, as operations in Australia and Chile partially offset Emeco’s lagging Canada business, where it was forced to make a $100.7 million impairment.
The company declared no interim dividend.
“We had a better start to the first half of FY16 but weakening market conditions in Canada over the period resulted in poor performance in this region,” Emeco managing director Ian Testrow said.
“In response to the sharp decline in performance of our Canada business we restructured operations in this region, significantly reducing our cost base.
“We are currently assessing opportunities to relocate fleet to stronger performing regions.”
Emeco’s operations in Western Australia improved during the first half with utilisation increasing from a low of 23 per cent to over 40 per cent by the end of the period, averaging 35 per cent all up.
The company expects further growth opportunities to be made in WA over the next 12 months as its customer base continues to expand.
Mr Testrow said overall the business expected its operating performance to improve during the second-half of the financial year.
“Recent growth in NSW and Queensland will see continued strong operating utilisation levels in Australia and Chile,” he said.
“Combined with cost reductions we expect to see improved earnings in 2H16.”
Mr Testrow said the company was on target to achieve cost savings of about $13.6 million in FY16.
“Further cost reduction initiatives implemented over year to date FY16 are expected to drive a further $13.1 million of incremental annual savings in FY17,” he said.
“Management is focused on improving the financial position of Emeco and assessing further deleveraging opportunities”.
Emeco closed unchanged at 2.9 cents each.
