Earthmoving equipment company Emeco Holdings Ltd has posted a full year net loss after booking $90.4 million in write-downs as it restructures its business in Australia and overseas.
Emeco reported an annual net loss of $49.3 million in the 12 months to June 30, reflecting the one-off impairment and restructuring charges due to business closures in Europe, the US and Australia.
The result followed a $13.3 million profit in 2008/09.
Emeco says its operating profit, excluding significant items also fell to $41.1 million, down 28.8 per cent on the previous year's result.
Total revenue for 2009/10 slumped 15.9 per cent to $404.96 million.
Chief executive officer Keith Gordon said the operating environment was challenging in 2009/10 for mining services companies, as the sector recovered from a severe downturn.
However, an increase in operating profit in the second half, from $13.6 million in the first half to $27.5 million in the second, reflected strengthening momentum in key markets.
"We have been encouraged by the increasing activity levels across 2H10 (the second half) as our customers ramped up production and resumed development activities," Mr Gordon said.
"Emeco's business is geared towards the production component of the mining cycle and we saw the utilisation of Emeco's equipment in this market area increase significantly over the course of the second half.
"Our business performed well in the last quarter and although it is early days, we have carried this momentum into 2010/11."
Mr Gordon said Emeco will focus on its core mining markets of Australia, Indonesia and Canada, with particular emphasis on exposure to coal, iron ore, gold and oil sands.
The company will exit the USA, Europe and Victorian rental businesses and downsize the Australian Sales and Parts businesses.
"By taking action to free up capital from these underperforming businesses and refocus on our core rental markets, the group is well placed to capture profitable growth opportunities, and deliver improved shareholder returns," he said.
Emeco will pay a final dividend of two cents per share, fully franked, after declaring no interim dividend
EHL Price at posting:
77.5¢ Sentiment: Buy Disclosure: Held
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