Transfield Services Ltd. (TSE) plunged to the lowest in 12 years in Sydney, leading a slump in mining and infrastructure contractors, after cutting its earnings forecast amid a slowdown in mining and processing activity.
Transfield fell 24 percent to 97 Australian cents, the lowest since May 3, 2001. Fleetwood Corp., which sells and rents portable buildings to infrastructure and mining customers, tumbled 25 percent after saying yesterday that second-half earnings will be below the first half amid a “softening resources sector.” The two companies were among the three worst performers in the benchmark S&P/ASX 200 (AS51) Index.
Mining and resources sector contractors are suffering with major customers deferring projects as commodity prices fall and costs rise. BHP Billiton Ltd. (BHP), the world’s largest mining company, is targeting an 18 percent cut to capital spending in fiscal 2014, its new chief executive, Andrew Mackenzie, said May 14. Rio Tinto Group is seeking to cut $2 billion in costs this year across its mining and corporate offices.
A slowdown is continuing in the mining and process industries and customers are “showing increasing cost and capital discipline,” Transfield said in a separate statement today for a presentation by Chief Executive Officer Graeme Hunt.
Net profit after tax and before amortization and one-time items may be A$62 million ($61 million) to A$65 million in the 12 months to June 30, the Sydney-based company said today in a statement. That compares with its previous estimate of A$85 million to A$90 million.
Ausdrill Ltd. (ASL), which operates drill rigs and provides blasting services for companies including BHP and Rio Tinto, slipped 2.8 percent to A$1.24. Monadelphous Group Ltd. (MND), which has construction and maintenance contracts with companies including Rio Tinto, fell 4.7 percent to A$16.60. UGL Ltd. (UGL), an Australian infrastructure contractor which lowered its profit forecast on May 15, fell 0.7 percent to A$7.30.
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