26/02/2014 - 15:25

Lycopodium profit down 51%

26/02/2014 - 15:25

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Contractor Lycopodium has issued a dire outlook on the second half of the financial year as headwinds in the mining services sector place a strain on its margins.

Lycopodium chairman Mick Caratti.

Contractor Lycopodium has issued a dire outlook on the second half of the financial year as headwinds in the mining services sector place a strain on its margins.

The company's half-year net profit fell more than 51 per cent to $6.3 million, while revenue was down 22 per cent to $96 million.

Its outlook for the second half is even more grim, with net profit tipped to reach just $3.2 million and revenue expected to come in at just $44 million.

Lycopodium said the forecast was a reflection of the continued deterioration of its minerals industry division, which has struggled to compete for contracts.

It has attributed its poor performance to lower commodity prices, a trend towards belt-tightening among major mining companies and the difficulty of raising equity for junior miners.

"The difficult question for us to answer is how long the industry will be at these low levels of activity," the company said.

"There has been a minor increase in the level of tendering for studies and projects since commencing the new calendar year, which is an improvement over the prior half.

"However our collective view is that our sector will remain subdued through the next 12 to 18 months."

The company announced a fully-franked interim dividend of 5 cents per share.

Lycopodium shares closed the day's trade 5 per cent lower at $4.04.

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