Emeco reports $21.6m loss

Emeco Holdings has reported a net loss of $21.6 million, down from a $28.5 million profit last year, following a series of downgrades and write-downs on the back of a slowdown in the mining sector.

The company made a statutory loss of $224.2 million, which included goodwill impairments of its Australian and Canadian businesses totalling $157.9 million, tangible asset write-downs of $43.7 million, $1.2 million in redundancy costs and $19.1 million written-off debt establishment costs.

The company’s revenue stream fell by 36.5 per cent to $241.1 million.

“Operating performance was down on FY13 due to lower activity in Australia as major miners reduced their use of contractors and the level of earthmoving activity,” Emeco said in a statement.

“The Canadian business experienced an earlier-than-expected cessation of the winter works program in oil and sands and a temporary unplanned shutdown at an oil processing facility of one of its major customers.”

In May, Emeco said it would cop a $41 million write-down after it closed its Indonesian operations, as well as a further $13.5 million tax hit, after completing a strategic overview of the business which found a slowdown in coal mining activity and a significant number of contract losses.

Emeco managing director Ken Lewsey said the company had taken steps during the past year to address the structural issues it faced.

“Pleasingly we won the projects we targeted six months ago, with these projects commencing in early FY15,” he said.

Emeco won a contract with Chilean contractor Fe Grande last week, which the company expects to generate between $27 million and $32 million in revenue per year.

The company lowered its net debt by 22 per cent to $323.3 million, which was assisted by a $US335 million bond issue.

Emeco’s cash balance stood at $41.8 million.

The company did not declare dividends for FY14.

“During FY15 we will continue to seek opportunities to improve utilisation of our existing fleet and divest under-performing asset classes,” Mr Lewsey said.

“In Australia we are seeing signs of an improvement in coal and gold, which has translated into an increased pipeline and some new contracts, although margins are expected to remain flat in a challenging environment.

“Canada and Chile are providing diversity for our business and we are looking to grow those businesses to capture on opportunities that exist in those markets.”

Emeco’s shares last traded at 21.5 cents per share at 11:15am.