Ausdrill downgrades FY profit

Mining contractor says African underground business will weigh on results.

Mining contractor Ausdrill (ASL) has again downgraded its full year profit forecast, this time by nearly 30%.

The Perth-based company's African underground mining services business (AUMS) was performing poorly and would weigh on its results.

Ausdrill is now predicting a net profit of $25 million to $30 million for the financial year to June 30, down from its forecast of $35 million in February.

That follows another downgrade before Christmas and two credit rating downgrades last month and in March.

The business remained comfortably within its debt covenants, Ausdrill said.

AUMS' operations had suffered from higher-than-expected costs, foreign exchange losses and other operational issues including at the Glencore-operated Perkoa mine in Burkina Faso.

The company expects a substantially improved result in fiscal 2015 and is committed to its African business.

That is based partly on the fact that it believes the miners it depends on will have to start capital spending, exploration and maintenance again soon.

"The anticipated improvements in these businesses are based on contracts which are now in place," Ausdrill said.

"Ausdrill is of the view that provided there is not a significant fall in commodity prices from current levels, the mining downturn may have bottomed out or be close to the bottom.

"However, it anticipates that any recovery will be slow with challenging market and mining industry conditions continuing in fiscal 2015, with subdued activity particularly in the Australian market."