Emeco’s Canadian business takes hit

Mining equipment supplier Emeco Holdings has announced a deterioration of its Canadian operations as a result of the depressed oil price, but still expects to lift underlying earnings from a weak FY15 result.

Perth-based Emeco said today that worsening conditions in the oilsands industry resulting from the lower oil price had significantly reduced work programs in Canada over the winter period.

“These weakening conditions have lowered outlook for the remainder of the financial year,” the company said.

Emeco managing director Ian Testrow said the Canadian business did not experience its typical seasonal uplift in utilisation late in the second quarter.

“The oilsands industry has been hit hard by the sustained lower oil price with producers delaying reclamation works to reduce operating costs,” Mr Testrow said.

“This poor performance in Canada is expected to continue for the remainder of FY16, however has been somewhat offset by improved performance in Australia and Chile.”

Emeco also announced its FY16 group operating earnings before interest, tax, depreciation and amortisation was expected to be between $53 million and $57 million, up 22 per cent to 30 per cent on the prior year.

The company reported an EBITDA of $43.4 million for FY15, down 29.5 per cent from its FY14 result.

Emeco suffered a $95 million net loss in FY15.

Shares in Emeco were 16.2 per cent higher to 4.3 cents each ahead of the close of trade.