Lycopodium revises profits down

Lycopodium expects its full-year results to be in line with 2012, breaking previous run of record revenue and profits.

In a statement released yesterday, ahead of the company’s annual general meeting, it said 2012/14 year would fall to between $180 million and $200 million, down from last year's record $232 million.

Last year Lycopodium saw a 31 per cent increase in profit, producing $232 million in revenue which delivered an after tax profit of $22 million, The West reported.

The announcement saw the contract mining and engineering company's shares fall to $5.04 before closing 12.69 per cent at $5.30 after falling as low as $5.04 in earlier trade.

The revised projections are a result of changing market conditions experienced over the past six months the company said.

"As a board, we normally limit financial guidance to the current financial year where we have reasonable visibility," Lycopodium said.

"However, with the changing market conditions, we believe there is a need to inform shareholders of our views for 2013/14.

"On the pessimistic side the recent deferral of projects by the major miners, the progressive completion of the iron ore expansion in the Pilbara and the challenging market conditions for junior miners has removed a base load of work in Perth and will, we believe, increase competition in the sector."

Lycopodium is currently involved in three big projects due for completion next year.

However, the company said it expects a number of them to go into implementation over time.

The engineering and project management consultant is the latest in a growing line of companies the mining services sector to issue a future earnings warning.

Boart Longyear also slashed its 2012 earnings forecast for the second time in three months, Australian Mining reported on Monday.

The company said it expected earnings to fall 10 to 13 per cent because savings from staff layoffs were yet to materialise.

But Boart said its revenue was still on track to hit $1.9 billion, and savings were still expected to flow through once it reduced its workforce.

"Revenues are broadly consistent with expectations, but margins in drilling services have been impacted due to timing of cost take-outs associated with headcount reductions," the company said.

“Margins are expected to recover as those employees come off the payroll.”

The company said earnings before interest, tax, depreciation and amortisation were expected to fall to between $310 million and $320 million, down from $356 million last year.

Boart Longyear chairman and acting CEO David McLemore said he planned to cut around 20 per cent of the company’s costs and early contract negotiations indicated drilling demand in 2013 was expected to match the levels seen in late 2012.

Image: The West

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