Weak Australian coal conditions drag Delta SBD to another loss

UNDERGROUND coal contractor Delta SBD has recorded an underlying net loss of $0.2 million for the six months to December 2014, largely reflecting a 12% reduction in revenue as general weakness in the Australian coal industry continued throughout the period.
Weak Australian coal conditions drag Delta SBD to another loss Weak Australian coal conditions drag Delta SBD to another loss Weak Australian coal conditions drag Delta SBD to another loss Weak Australian coal conditions drag Delta SBD to another loss Weak Australian coal conditions drag Delta SBD to another loss

Delta SBD chief executive Steve Bizzaca

Lou Caruana

Underlying EBITDA was $0.8 million, while underlying EBITDA margins improved to 2.7%, Delta SBD CEO Steve Bizzaca said.

“This has been an extremely challenging period both for the entire mining services sector and for Delta SBD,” he said.

“The management team has successfully reduced our site labour and organisation costs and debt levels. The cost reductions achieved have ensured that the company is more competitive and viable, is providing a value added solution to our clients in this difficult environment and is positioned appropriately when market conditions ultimately begin to improve.

“Pleasingly we have been successful in a number of contract awards, for both new and recurring work, and contract extensions evidencing our ability to be competitive. Personnel hours are at their highest in 18 months and as new contracts will be undertaken in the second half, these numbers are expected to increase.”

The majority of the longwall relocation equipment as well as some minor mining equipment, was successfully sold as part of the company’s debt reduction initiatives. Debt for plant and equipment reduced from $10.530 million as at June 30, 2014, to $1.3 million.

Some equipment held for sale is currently in process of sale and further debt reduction will result.

The company’s expectations for the January to June 2015 period continue to be set against a framework of continuing general weakness in the coal industry in Australia, it said.

“The effect of the new Delta coal mining enterprise agreement and the varied Delta mining enterprise agreement has made the group significantly more competitive by offering our clients a more viable outsourcing solution, as well as reducing costs and improving the overall sustainability of the group,” the company said.

“Notwithstanding the above, the group forecasts improved performance for the 2015 fiscal year as the company will continue to provide value added services to Illawarra Coal as well as undertake numerous relocation projects including recurring work at Glencore’s Blakefield, Ulan 3 and Ulan West mines, Peabody’s Wambo mine and Whitehaven’s Narrabri mine over the next 12 months.”

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