Swick holds on as profits dive

SWICK Mining Services recorded an 86% year-on-year fall in profit for fiscal 2014, citing lower customer demand.

Justin Niessner

Net profit after tax was about $A1.5 million, compared to $11.3 million a year ago.

Full-year revenue was down 20% over the year to $117.6 million due to reduced demand for mineral drilling services and the suspension of the underground production drilling division in the last quarter.

Earnings before interest, tax, depreciation and amortisation were down 46% at $16.6 million.

“The year ended June 30, 2014 was impacted by lower demand from the client base as a result of reduced budgets and cost saving measures as mining companies, globally, focused on conserving cash,” Swick said today.

“With the continued volatility within the commodity markets and particularly the ongoing weakness in gold and copper prices, mining companies continue to tightly manage cash costs within their businesses.

“Although this continues to be an extremely tough market for mining services companies, the company believes that the advantages of its world-leading underground diamond drilling technology continue to demonstrate its value to our customers.”

In the last quarter of the year, Swick declared a record number of metres drilled within its core underground diamond drilling division at 250,500m.

This followed a job win in December with MMG and a string of domestic and overseas contracts signed last September.

Total metres drilled (including surface drilling) were down 11% for the quarter compared to a year ago but reflected an 18% increase over the last three consecutive quarters.

“The company’s challenge is now to effectively integrate and benefit from new technologies and operating systems developed in house to improve productivity,” Swick managing director Kent Swick said.

“The best companies do their best work in tough times and I am very proud of the efforts made throughout the business from the executive to the site crews in improving efficiency, removing waste and focusing on always delivering a quality product to the clients.

“I have received a lot of personal feedback from our clients in recent times, congratulating the company on its improvements in quality and operating performance despite the difficult market.”

Swick ended the year with an 80% lower cash balance of $4.2 million and a 909% increase in net debt from $1.6 million last year to $16.6 million.