Boart Unable to Forecast Earnings as Miners Halt Investments
Boart Longyear Ltd. (BLY), the world’s biggest provider of mineral-drilling services, said it’s unable to say if earnings will decline next year as mining companies halt investments amid slowing economic growth.
“I’m not sure mining companies know what the demand is going to be next year, so it’s very hard for me to put those numbers for the investors,” Chief Executive Officer Craig Kipp said in a Bloomberg Television interview with Rishaad Salamat. “There’s just a little bit too much uncertainty.”
Boart shares had a record decline in Sydney trading yesterday after the Salt Lake City, Utah-company lowered its 2012 earnings forecast by as much as 22 percent, citing the lack of clarity about the European debt crisis, slowing growth in China, restrictive financing conditions and the U.S. elections.
“It’s probably an understatement to say that our market here in Australia is a little jumpy right now about mining stocks in general, so we got hit pretty hard,” Kipp said.
The stock fell as much as 7.3 percent to A$1.39 and traded at A$1.42 as of 2:51 p.m. local time. The shares have fallen 49 percent this year, compared with a 6.5 percent gain in the benchmark index.
Mining companies are scaling back investments to focus on quality projects, prioritizing spending on low-cost mines that produce higher ore grades and in regions where governments are supportive of their projects, he said.
“They’re deciding to just pause for a minute and go back and just try to get as much ore out of the ground at the best cash cost,” Kipp said. “That to me is kind of the overriding theme that we’re seeing.”
Boart yesterday reduced its forecast for 2012 earnings before interest, taxes, depreciation and amortization to a range of $360 million to $390 million from $460 million. It also cut its revenue forecast by 13 percent to $2 billion, in line with last year’s result.
To contact the reporter on this story: Soraya Permatasari in Melbourne at firstname.lastname@example.org