Mining and earthmoving equipment supplier Emeco Holdings has become the latest resources sector participant to feel the squeeze, downgrading its profit guidance in the wake of reduced industry activity.
Emeco announced on Friday that it now expected its operating net profit to be in the range of $23 million to $26 million, down from earlier forecasts of $29 million.
The company's shares plunged by 16.5 per cent following the announcement, making Emeco the worst performer in the ASX 200.
The group said continued low activity levels in the Australian market had resulted in revised assumptions on contract renewals, leading to the decrease in earnings expectations.
“While we are seeing some utilisation challenges in Australia as a result of lower commodity prices and subdued mining activity, strong trading conditions in Canada and Chile, together with a solid customer base in the Indonesian business, is expected to help offset some of this softness,” managing director Keith Gordon said in a statement.
At 10:20AM, WST, Emeco shares were down around 1 per cent for the day, trading at 51 cents.