The company’s shares had dropped 30.5% to $A1.49 by late afternoon after earlier hitting a low of $1.41.
Ausenco, whose key customers remain in the environmental, minerals and metals, oil and gas and power sectors, said its financial performance in the 2013 second quarter had been affected by a number of contract specific issues and a softer market.
In addition, the period had been adversely impacted by extraordinary costs associated with right-sizing the business to maintain sustainable longer-term margins.
The company expects to deliver underlying earnings before interest, tax, depreciation and amortisation between $A15-$16 million and underlying after tax of $6-$7 million.
Based on the lower first-half performance and low business activity levels expected for the rest of the year, Ausenco said full-year results for 2013 would be below current market levels of revenues between $564 million and $661 million, with reported net profit after tax would be somewhere between $29m-$41m.
The company plans to provide an update on anticipated full-year guidance in late August.
Still, the bottom end of its lowered revenue forecast is considerably down from a full-year net profit after tax of $A41.4 million for the 2012 financial year.
Since updating the market on business conditions at its May annual general meeting, the mining services company, like its peers, is being hurt by rapid deteriorating conditions predominately in the mining industry.
Ausenco said since its AGM, it had witnessed a number of clients announce reduced capital expenditure programs, large asset write-downs and programs to dispose of non-core or underperforming assets.
This had been most apparent in the APAC/Africa region, with the company reporting the renegotiation of some contracts as a result of increased market competition in the short-term which had led to lower margins and reduced scopes and revenues on existing contracts.
The company has reacted to the tougher market conditions by initiating a number of overhead savings programs which will result in an undisclosed number of redundancies.
While this had set the company back $5 million, Ausenco said the changes and others initiated by management would save it about $13 million in overhead costs in the second half of the 2013 and between $20 and $25 million annually from 2014 onwards.
Ausenco, which is expanding its services in Calgary and is looking to relocate some services to lower costs services due to Australia’s high cost nature, remained upbeat despite the difficult times.
“Ausenco’s balance sheet remains strong,” the company said.
“The company’s strong operating cash flows and relatively low gearing put it in a strong position to address short term market conditions, while also enabling it to continue pursuing attractive acquisition growth opportunities in the oil and gas and power and environment and sustainability sectors to drive long term sustainable earnings.”
