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The company has also been impacted by problems in Mongolia and Indonesia. It will continue to restructure the business to meet the challenging operating environment, it said in a trading update.
“The company has seen a general contraction in the demand for mining services across the company's operation in the first half of FY13,” it said.
“This contraction has been significantly influenced by falling commodity prices, lower financial market activity and the impact of resource nationalism in some of Runge's key overseas markets, including Indonesia and Mongolia.
“These factors have contributed to mining project delays and a general downturn in demand for advisory and mining consulting services.”
The company’s financial results are associated with the fortunes of its coal customers, despite its diversification across commodities, product lines and geographic regions.
The Australian market, which accounts for about 55% of revenue, has been particularly impacted by slowing activity in the coal sector and the effect on local mine operators of the high Australian dollar.
Revenue from coal-related consulting in Australia is expected to be 25% below the prior year’s result.
“As revenues have contracted, Runge has engaged in an aggressive restructuring and cost-reduction program resulting in annualised savings of approximately $8 million,” Runge said.
“These initiatives will result in restructuring costs of $1.5 million and non-cash impairment charges of $1.4 million being recognised in this half.”
Subject to the completion of software sales currently under negotiation, Runge is expecting to report an operational EBITDA for the half year (before restructuring and impairment costs) of $500,000 to $1 million, compared to $5.4 million for the previous corresponding period.
Reported EBIT, inclusive of restructuring costs and impairment charges, is expected to be a loss of $4 million to $4.5 million.
After the appointment of Richard Mathews to the role of chief executive in late August, the management team has undertaken a review and restructure of operations to align with the current business environment.
