Mining slump hits Boart Longyear
Mining services company Boart Longyear Ltd has downgraded its full-year earnings forecast, citing softening demand for its drilling operations.
The global compnay’s Australian operations are headquartered in Adelaide.
Boart also announced changes to its debt financing facilities as it seeks to cuts costs to cope with the decline in demand.
“Drill rig utilisation rates for the company have dropped to the low 50s, and competitors appear to be experiencing comparable decreases,” the company said in a statement to the stock exchange today.
“Customers for drilling services also continue to announce reductions or delays in their drilling programs, capital expenditures and overhead costs, which have resulted in continuing uncertainty about the levels at which drilling activity will stabilise.
“Accordingly, the assumptions upon which the company’s 2013 full-year outlook at the AGM were based no longer appear to reflect current market conditions. Observers have further moderated their outlook for the industry and the Company since the AGM.”
Boart’s president and CEO Richard O’Brien said the company had approached the banks to give it room to move.
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“I am pleased that we were able to restructure our debt facility with the cooperation of our supportive bank group,” he said.
“We proactively pursued these amendments to provide the company more flexibility around its ability to comply with covenants during a period of industry contraction and allow us to continue to focus on generating shareholder value by reducing costs, improving margins and paying down debt.”
“We felt it was prudent to increase our covenant levels to allow us to absorb further adverse changes in our markets and other impacts on working capital…
“We are making progress on our efforts to improve our business, and I will provide more information on those efforts and the condition of our business at our half-year results presentation on 26 August.”
