Emeco slammed on slashed guidance

Emeco Holdings has plunged the most in nearly five-and-a-half years after slashing its earnings guidance for 2012-13.

Shares in the earthmoving equipment rental and sales company crashed by 20% to 30 cents at close, which is its lowest price since March 2009 and half what it was in January this year.

The company has cut its earnings guidance by up to 25% to between $35 million and $36 million for 2012-13, blaming poor utilisation of its equipment in Australia, lower operating hours in Canada and bad debts from Indonesia.

"An expected uplift in utilisation towards the end of FY13 through the deployment of equipment has not occurred due to project delays," the group said.

Emeco’s operations in Australia account for roughly 80% of its total revenue.

Shrinking earnings is not at all isolated to Emeco in the mining-services industry. Other companies including mining contractor NRW Holdings  and crane leaser Boom Logistics have posted profit warnings in the past two months.

Emeco anticipates non-cash impairments of around $10.5 million this year in relation to its Guildford facility in Western Australia and its old inventory from its terminated Sales and Parts business.

“We are managing our Australian and Indonesian businesses in anticipation of the current challenging conditions continuing well into FY14,” said managing director Keith Gordon.