First half loss at Boart Longyear

Drilling equipment manufacturer Boart Longyear recorded a loss and a slump in revenues after its first half results were hit by restructuring charges and weak demand.

The company reported a net loss of US$ 329 million for the six months to 30 June, compared to operating profit of US$ 98 million for the same period in 2012. Revenues fell -35% year-on-year to US$ 719 million.

Boart Longyear said demand for its drilling services and products fell after its key customers responded to volatility in the global mining market by reducing budgets.

The company started several restructuring initiatives to reduce overheads and operating costs, including reducing its workforce by 2,800 since 1 January. In total, Boart Longyear incurred US$ 315 million of charges related to restructuring and impairments.

Warning

The manufacturer said it was also seeking to refinance, warning that if it did not recapitalise, it could be in breach compliance agreements with its creditors. It said that, in light of market conditions and the need to preserve liquidity, it would not pay an interim dividend for the first half of 2013.

Looking ahead, Boart Longyear forecast its second half results to be lower than the first six months of the year. Full-year 2013 earnings before interest, tax, depreciation and amortisation (EBITDA) are expected to range between US$ 116 million and US$ 159 million, compared to 2012’s EBITDA of US$ 254 million.

President and CEO Richard O’Brien said, “The magnitude and velocity of the market’s contraction during the year has surprised many people in the industry. 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 US$ 90 million of reductions by the end of 2014, in addition to the US$ 70 million of reductions announced in late-2012.”