Bradken has reported a fall in its earnings as the slowdown in the mining sector bites into sales, forcing it to cut jobs.
However it is predicting a return to growth later in 2014.
In its half year results, released today, the company announced an NPAT of $38.1 million for December 13, a drop of 18% from the previous corresponding period.
It saw a similar 18% drop in EBITDA, from $105.1 million in December 12 to $86.2 million in December 13.
The mining consumables manufacturer also saw a 17% fall in sales revenues, dropping from $680.5 million to $536.6 million year on year.
However despite this the manufacturer is still upbeat about the current state of business.
“In spite of the first six months of this financial year being particularly challenging for Bradken with sales remaining at low levels, we slightly exceeded our first half guidance of $85 million EBITDA,” it said in a company statement.
“Since June 2013, we have seen order intake levels strengthen for all consumable product ranges. Mine production levels are continuing to increase and we expect sales to improve through the second half,” Bradken’s managing director Brian Hodges said.
The poor Australian market has hurt Bradken’s GET and crawler systems revenue, however it has seen a positive spike in its minerals processing division, which was up 6% to $117 million as well as fixed plant sales.
Unfortunately the company did see an increase in its LTIFR from 4.3 to 4.8, whilst at the same time reducing its overall workforce from 5500 to 5200 over the half year period.
In the wake of market conditions, Bradken has looked to increase its scale and diversify its product base, Hodges explained.
As part of this diversification strategy it has made moves to acquire Australian mining equipment manufacturer Austin Engineering.’
“Bradken and Austin have executed a Confidentiality Agreement on acceptable terms and we are waiting on due diligence to commence,” Hodges said.
However “it should not be construed that a binding agreement will occur,” he added.
It has predicted a stronger second half of 2014, stating that “Bradken continues to focus on cash and will reintroduce its dividend reinvestment plan as well as largely restricting capex for ‘stay in business’ to $25 million in the second half”.
“Net debt/ EBITDA is expected to return to around 2.0, our long term average and the refinancing will deliver much lower interest costs in the fourth quarter,” Hodges said.
“Overall, we see high single digit sales growth for most of the business with no need to increase overheads in the period leading to sound profit conversion.
“Based on all of the above, we forecast around $180 million EBITDA for the full year.”