WDS set to defy coal market downturn

MINING and energy contractor WDS expects net profit after tax for the 12 months to June 30, 2013 to slightly exceed the upper end of its February guidance range of $6-8 million despite a difficult underground coal market.
WDS set to defy coal market downturn WDS set to defy coal market downturn WDS set to defy coal market downturn WDS set to defy coal market downturn WDS set to defy coal market downturn

A WDS mining contractor.

Lou Caruana

The company has embarked on a cost saving regime and diversified into energy drilling to tap into the expanding LNG market in Queensland.

WDS chief executive Terry Chapman said its mining business had seen reduced activity as a result of the “very challenging conditions in the coal sector”.

“However, in this context it is worth highlighting that during the June quarter WDS commenced work for Eagle Downs Coal Management on building the portal arches to their Eagle Downs project,” he said.

“We are pleased that we have maintained strong personal and business relationships with our customers and WDS is therefore well positioned to take advantage of further work as and when the coal market moves into the cyclical recovery phase.”

Revenue for the 2013 financial year is expected to be in the range of $350-355 million, compared with the company’s previous guidance of $330-350 million.

“Achieving completion on a number of projects had removed some of the uncertainty impacting earlier guidance and this, together with increased revenue from major projects in recent months, has resulted in this positive revision to our guidance,” Chapman said.

“We are pleased that the diversity of our business model is continuing to bear fruit in what is a very challenging coal market for our underground mining business.

“Considerable effort has been made to ensure our balance sheet remains strong and we are pleased to see this effort pay off.

“WDS has begun the 2014 financial year with cash in hand, which positions us well for future growth.

“More importantly it provides us with flexibility to consider our options for improving returns to shareholders on a sustainable basis.

“We look forward to updating the market in more detail when we announce our full year results on 28 August.”

The close-out of major contracts and the ramp-up of the Australia Pacific LNG contract had positively impacted cash flow for the year.

Improved earnings from the energy division more than offset a continuing weak earnings performance by the mining division, Chapman said.

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