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Boart Warns Investors of Decline in Performance

August 26, 2013 by rochelle in Business with 0 Comments

Drilling industry Boart Longyear has had a dip in its shares recently, resulting in a heavy loss for June. But the company said that its earnings have not yet reached rock bottom despite the slowdown in the mining sector.

For June, the company has posted a loss of $US329 million, which has lowered down its reported net profit at $US98 million even further. Meanwhile, revenue was at $US719 million, a big slump for its previous $US1.1 billion report.

Shares dropped from 8.1% to 4.5% in the early trades today.

Boart attributes all these changes to write-offs and provisions and the directors are even expecting lower results for the second half of the year.

In a statement, the directors said, “Analyst expectations may not adequately reflect the risk of price erosion in the 2H and may assume larger benefit of cost savings initiative.”

“Rig utilisation dropped to approximately 50 per cent in August from approximately 60 per cent in May.”

“The current backlog in the company’s products business has also decreased from May levels, consistent with declines in utilisation rates of drilling services contractors.”

Investors have been advised by Boart to lower their estimates, given that the industry itself is volatile and could severly impact the company’s performance.

Investors should be made aware of the price erosion risks, as well as the company’s effort to reduce cost.

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