Miner disclosures reveal tight cash and flagging order books

Mining contractors endured a tough reporting season, with many revealing sharply lower order books and weak cash flow, according to the Australian Financial Review.

Even one of the sector’s stars, Monadelphous, which delivered its 12th consecutive year of earnings growth with annual net profit up 24% to $156.3 million, warned that its run of good fortune was coming to an end.

Chief executive Rob Velletri said the group’s strong revenue growth over the past two years was “abnormal”, forecasting that fiscal 2014 would be a year of consolidation.

Chinese slowdown sees analysts snub miners

The market may be expecting the resources sector to provide a sizeable lift to 2014 company earnings, but equity strategists are shying away from mining companies because of the risks presented by the slowdown in Chinese growth, according to the Australian Financial Review.

Earnings growth expectations for the year to June 30 remain about 13%, consisting of about a 35% gain in resources and 8% growth for the rest of the market.

JPMorgan equity strategist Paul Brunker is firmly in the camp that favours resources, with the bank maintaining an overweight position in its model portfolio, but this reflects expectations of a stronger performance from energy companies, not the miners.

“We remain about neutral on the [mining] sector, as we still find an overweight in mining a tough case to make,” he said in a recent note to clients.

“We think investors are rightly more cautious about the Chinese growth model and that any growth reprieve bought by state-driven borrowing will be given only small credit in stock prices.”

Leighton loses Indonesian coal exec

Leighton Holdings has lost one of its senior executives at its troubled Indonesian coal operations as speculation mounts that another of its mining company partners in the South Kalimantan province is preparing to dramatically scale back work at one of its flagship coalmines, according to The Australian.

It is understood Jim Russell, the finance director at Leighton Contractors Indonesia, has recently left the company as Leighton subsidiary Thiess Contractors Indonesia remains in a legal dispute with mining giant Bumi Resources, which owns the Senakin and Satui thermal coal mines in the province.