24/02/2014 - 10:24

Swick reports half-year loss

24/02/2014 - 10:24

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Swick Mining Services has posted a narrow half-year loss on the back of softer demand in the mineral driling market.

Swick reports half-year loss
Swick Mining Services managing director Kent Swick.

Swick Mining Services has posted a narrow half-year loss on the back of softer demand in the mineral driling market.

Swick posted a $400,000 net loss in the six months to December 2013, compared with a net profit of $5.3 million in the previous corresponding period.

The company's revenue was 25 per cent lower at $56.8 million as total fleet utilisation slumped to just 54 per cent, its lowest recorded point in more than five years.

Earnings before interest, tax, depreciation and amortisation were 58 per cent lower at $6.8 million, which represents an 11.9 per cent EBITDA margin - slightly lower than the company's forecast range of between 12 per cent and 14 per cent.

Swick said greater competition for work meant it had also been forced to renew and negotiate contracts at lower prices.

However the company is hopeful its margins will improve in the second half of the 2014 financial year, driven by additional revenue from recently awarded contracts and cost savings from efficiency gains.

"It is very disappointing to report a loss to shareholders," Swick managing director Kent Swick said.

"The mineral drilling market has been exceptionally difficult and is expected to remain subdued for some time.

"The important factor for Swick as a company is that it is focused on operating mines and in a specialist niche. This has not fully protected the revenue but has cetainly provided some cushioning in comparison to the wider mineral drilling market."

Swick has maintained its full-year revenue guidance of between $115 million and $125 million, however it has revised its forecast EBITDA margin range down from 14 - 16 per cent to 13 - 16 per cent.

The company has declared a fully-franked interim divend of 0.2 cents per share.

Swick shares were trading 3.5 per cent lower at 27 cents at 10:21am WST.

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