Ausdrill has posted a 15 per cent profit downgrade for the year to June 30, and says a slowdown in the local mining sector is to blame for its weak performance.
In an investor update yesterday Ausdrill said it expected a $90-$96 million profit for the year, down from the $112m forecast in February.
“The group's profits are expected to be impacted by the general slowdown in activity in the Australian mining sector that has occurred from September 2012 onwards, and which has not recovered as previously expected,” it said.
Ausdrill said the slowdown had hit particularly hard in the equipment hire and exploration segments.
It said there was now a surplus of mining equipment in the sector due to project deferrals and cancellations and the tough conditions were expected to continue in the near term.
On a wider scale Ausdrill also said delays in coal seam gas drilling across eastern Australia and weak commodity prices had softened demand for its products.
“Ausdrill considers that the forecast result is acceptable considering the adverse market conditions that have beset the industry since September 2012,” it said.
The announcement caused a sharp sell-off in Ausdrill shares yesterday, with the company shedding close to ten per cent of its value, with similar losses incurred this afternoon.