Boart's full-year earnings eroded

PRICE erosion and higher than anticipated costs have led services company Boart Longyear to reduce the yearly earnings predictions previously made in its full-year outlook.

Jack McGinn

While revenue is expected to fall at the higher end of previous predictions at around $US837 million ($A1.015 billion), the company had revised its estimated earnings before interest, tax, depreciation and amortisation to be around $US30 million.

Previous analysis predicted earnings of between $34 million and $48 million.

Boart said the reduced figure was due to price erosion, higher than anticipated rig maintenance and mobilisation costs within its drilling services division, with unfavourable currency movements also contributing to the fall.

Net debt estimates show a range of between $424 million and $561 million.

The company expects to fall within the higher end of this range provided recapitalisation transactions, including $21 million transaction for share placement with Centerbridge Partners, are approved at an upcoming shareholder meeting.

Boart president and chief executive officer Richard O’Brien said the company would continue to address higher than expected costs.

“As indicated in our most recent market updates, we continue to experience the effects of lower pricing, primarily within our drilling services division,” he said.

“Further, even though utilisation rates appear to have stabilised, we are experiencing higher than anticipated rig maintenance costs and mobilisation/demobilisation costs.

“We will continue to review these and other costs and to evaluate our contracting practices to improve our performance and profitability in the coming year.”

The announcement continues a difficult year for Boart, which posted a 41.4% decrease in revenue and $33 million loss in the first half of the year, though this was an 89% improvement on the year-ago figure.

The company was buoyed by a $352 million recapitalisation plan with Centerbridge in October. The $21 million transaction forms part of this, and will be put to shareholders on December 17.

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