The drilling giant said reduced capital budgets among resource companies and lower demand for drilling services hampered performance over the six months – and were expected to persist throughout the year.
The company recorded a net loss after tax of $US60 million ($A66.6 million) compared to a profit of $98 million a year ago.
Revenue for the half year was $719 million, down 35% compared to the first half of 2012.
Earnings before interest, tax, depreciation and amortisation were down 62% year on year at $80 million.
The falls were attributable to lower commodity prices and challenging market conditions, only partially offset by several major restructuring initiatives over the period.
Costs linked to restructuring activities totalled $98 million, while impairment charges included a $175 million write-down of goodwill and intangible assets and a $42 million write-down of rigs and ancillary equipment in the company’s drilling services division.
“The magnitude and velocity of the market’s contraction during the year has surprised many people in the industry,” Boart president and chief executive Richard O’Brien said.
“While we continue to be challenged in implementing cost reductions quickly enough to keep pace with the market’s decline, we are taking aggressive steps to control costs.
“Our latest cost reduction initiatives should lead to approximately $90 million of reductions on a run-rate basis by the end of 2014, in addition to the $70 million of reduction announced in late-2012 and already being realised in 2013.”
Cost-cutting strategies over the half year included the reduction of more than 2800 personnel since January, the consolidation of aftermarket services with the drilling division and the sale of non-core drilling services operations.
Overall, the demand for exploration drilling remained slow, with the company’s drilling services segment recording a 34% year-on-year slide in revenue to $538 million for the half year.
Boart’s drill rig utilisation averaged about 55% for the period, compared to about 80% a year ago.
Low utilisation rates also impacted the company’s products division, which posted revenue of $181 million for the period, down 36% from last year.
The company said despite its restructuring and cost-cutting efforts, performance results for the second half of the year were expected to continue to fall.
It is estimating its full-year EBITDA to be at the lower end of analyst forecasts at $116-159 million.
EBITDA for FY2012 was posted at $321.9 million.
O’Brien, however, offered some optimism for investors with a long-range perspective.
“Historically, the company has experienced significant fluctuations in its enterprise value driven by the cyclicality of the markets it serves, as well as the resulting risk aversion and near-term uncertainty this creates for shareholders,” he said.
“The board and management believe that the current market enterprise value is significantly below the fundamental value of the company and we are committed to closing this gap by improving our capital structure, running our business more efficiently, reducing costs and prudently managing the risks in our business.”
Shares in Boart were down 7.2% today at A51.5c.
