Engineers feel squeeze on slowdown
The warning came as Downer EDI cut 106 jobs at Japanese oil trader Idemitsu's Boggabri coalmine in north-western NSW following production cuts because of weak thermal coal prices.
Just last month, Whitehaven axed 40 jobs at its mines nearby.
Additionally, Tanami Gold is to cut up to 150 jobs in Western Australia as it puts its Coyote goldmine on "care and maintenance" following the gold price slump, which has left the high-cost operation exposed.
On Wednesday, Coffey flagged a second-half pre-tax profit that would fall short of the $23.7 million earnt in the December half.
Previously it had said the second-half pre-tax profit would at least match the earnings of the previous half. It blamed the recent downturn in commodity prices, which is pressuring Coffey's turnaround prospects, although it is not yet clear whether this has now been derailed.
"Market conditions have deteriorated significantly in recent weeks with commodity prices, particularly gold, falling sharply," it told investors on Wednesday.
"This has been accompanied by some broader loss of business confidence in the Australian market."
Earlier in the week, mine services group Imdex blamed weak demand from the mining sector for a 17 per cent slide in March-quarter revenue, although the impact was partly offset by continuing buoyancy in its oil services division.
The decline in commodity prices, especially the recent slump in the gold price and the steady slide in the price of copper amid mounting concern over the global growth outlook, has prompted mining companies and explorers to conserve cash.
Coffey's Australian geosciences and projects businesses were experiencing an increasing number of project delays, the company said.
"As a result, it is now unlikely that the company will achieve its previous market guidance of an H2 EBITDA [earnings before interest, tax depreciation and amortisation] performance that equals or exceeds the H1 result."
At the same time, analysts on Wednesday were downbeat over the outlook for Boart Longyear, a drilling services operator, with Citi telling clients that Boart shares could be worth only around 68¢ if commodity prices fell 10 per cent, which would translate into a 40 per cent slump in revenues.
Coffey shares closed down 10.5¢ at 19.5¢. Imdex fell another 4¢ to 96¢ as Boart Longyear edged ahead 2.5¢ to 94¢.
Frequently Asked Questions about this Article…
Coffey International downgraded earnings after a downturn in commodity prices, particularly a sharp fall in gold, weakened business confidence and increasing project delays. The company warned second-half pre‑tax profit would fall short of the $23.7 million earned in the December half and said it is now unlikely to achieve previous H2 EBITDA guidance that would match or exceed H1.
The article reports a decline in commodity prices — notably a slump in gold and a steady slide in copper — has prompted miners and explorers to conserve cash, delay projects and reduce spending. That weaker demand is weighing on revenues and has led to cost‑cutting measures across the sector.
Downer EDI cut 106 jobs at Idemitsu’s Boggabri coalmine after production cuts due to weak thermal coal prices; Whitehaven recently axed 40 jobs nearby; and Tanami Gold said it would cut up to 150 jobs and place the Coyote goldmine on care and maintenance after the gold price slump exposed the mine’s high costs.
Imdex blamed weak demand from the mining sector for a 17% slide in March‑quarter revenue. The company said that decline was partly offset by continuing buoyancy in its oil services division.
Analysts were downbeat about drilling services operator Boart Longyear; Citi told clients Boart shares could be worth around 68¢ if commodity prices fell 10%, a scenario that would translate into about a 40% slump in revenues according to the note referenced in the article.
The article states Coffey shares closed down 10.5¢ at 19.5¢, Imdex fell another 4¢ to 96¢, and Boart Longyear edged ahead 2.5¢ to 94¢ on the day covered.
In the article’s context, Tanami Gold putting the Coyote goldmine on care and maintenance followed a gold price slump that left the high‑cost operation exposed. For investors, this indicates reduced or suspended production at that site and immediate cost‑cutting steps — including job reductions — until market conditions improve.
The article describes a deteriorating outlook: commodity price falls (especially gold and copper), broader loss of business confidence in Australia, project delays in geosciences and projects, cash conservation by miners and explorers, and negative analyst commentary — all signalling a challenging environment for mining services and related companies in the near term.
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