Mastermyne lowers its outlook

UNDERGROUND coal contractor Mastermyne has further slashed its net profit after tax outlook for this financial year as it grapples with the effect of a deferral of its drivage contract with Centennial Coal’s Newstan colliery in New South Wales.
Mastermyne lowers its outlook Mastermyne lowers its outlook Mastermyne lowers its outlook Mastermyne lowers its outlook Mastermyne lowers its outlook

Courtesy Mastermyne.

Lou Caruana

But the company is prepared to take advantage of any improvements in the industry and grow strongly in the latter part of next financial year, its managing director Tony Caruso said.

“Although we expect the first half of FY14 to remain very challenging, Mastermyne is well positioned,” he said.

“We expect to enter FY14 with little net debt and are expecting momentum to build over the year.”

Mastermyne now anticipates NPAT for the 12 months to June 30 to be in the range of $11.1-$11.6 million, compared with the company’s previous guidance of $12-13 million.

Revenue is anticipated to be $245-$250 million, which compares with previous guidance of $245-255 million.

The Newstan contract was a part of the company’s order book for the remainder of the 2013 financial year, but was not part of the 2014 order book and beyond.

New contracts have led to Mastermyne reporting a 2.2% higher half-year net profit after tax of $8 million, despite the slowdown in the sector.

Revenue for the six months to December 2012 was up 14.3% on the prior corresponding period to $142.1 million.

Mastermyne continues to pursue a number of significant tender opportunities, however the timing of these projects remains uncertain, it said.

“The company remains the only major contractor still operating on a number of key sites and therefore is well positioned to undertake further work required on these sites as the coal market recovers,” it said.

The company also expects that as the coal market recovers, mine owners will increasingly utilise contractors to execute packages of work to ensure the long-term sustainability of the mine is not impacted.

Utilising contractors also benefits the mine owner by avoiding increased fixed costs in their operations, Caruso said.

The company has $447 million in active tenders, a large portion of which will be awarded in the next three months, contributing revenue from early FY2014.

As well as these active tenders, the company has also identified a further $545 million in tendering opportunities that will come through in the next four months, the majority of which will also contribute revenue in FY2014.

In addition to new tendering and fleet hire opportunities, Mastermyne is confident of renewing current contracts in the order book as they fall due.

These opportunities will support the return of EBITA margins at historical levels of 9% to 9.5% and continued revenue growth. The company remains positive about its prospects for FY2014 and beyond, despite the subdued second half, Caruso said.