Mining machinery hire and rental company Emeco Holdings has incurred a post tax impairment charge of $5.9 million.
The company announced that it incurred the debt in its first half results due to a debtor in its Indonesian business.
Emeco managing director Keith Gordon labeled the impairment as “very disappointing.”
He said that “over the last six months Emeco Indonesia has been trading with a mining contractor which faced equipment and operational issues beyond its control.”
While the miner’s plan showed that the debt incurred would be recoverable, information Emeco received over the weekend is now casting doubt over the recoverability of this debt.
Emeco will announce its FY11 interim results on 22 February, and had previously provided guidance results putting NPAT in the range of $27 to $29 million.
However, due to this “one off impairment we now expect NPAT to be $23.6 million of the half,” Gordon said.
He went on to say that “despite this impairment, we see strong commodity fundamentals in the market” and “although this is a localised one off event, we will take steps to ensure that circumstances such as this will not be repeated.”
Emeco has a market cap of $706.99 million.