Emeco shares slump despite 214% profit increase

Emeco Holdings tripled its profit for the 2019 financial year, but its shares dropped 9 per cent today after it flagged flat earnings in the first half of this fiscal year.

The mining equipment supplier reported its net profit after tax was up 214 per cent to $63.1 million, and its earnings before interest, tax, depreciation and amortisation was up 40 per cent to $214 million.

The results were in line with guidance, as in June Emeco said it expected its EBITDA to rise by around 40 per cent.

Additionally in June, Emeco stated its outlook for the 2020 financial year remained strong, with little other additional detail.

But today, Emeco said it anticipated flat earnings for the first half of 2020 as large projects it was involved with had now concluded and its fleet would be allocated to new projects.

It expects earnings to build in the second half of the year as new projects commence.

Emeco reduced its leverage from 2.6 times to two times for the financial year, which was 12 months ahead of target.

The company, which has not paid a dividend since 2013, did not reveal whether or not it would pay shareholders in the near future, but indicated it would continue to prioritise reducing its debt.

Shares in Emeco fell from $2.36 each to close at $2.11.