The chief executive of Transfield Services admits the company must fix its balance sheet after a profit downgrade but insists the company's future is still bright.
The construction and maintenance group's share price is in free fall, diving to record lows last week after it lowered its profit guidance for the second time in six months.
This is the latest in a string of downgrades by companies that are exposed to mining services: the earnings and shareholder funds of UGL, WorleyParsons, Boart Longyear and others have evaporated recently.
Transfield CEO Graeme Hunt denies things have gone wrong for the company, but he admits the outlook for next year is not as rosy as it was a few months ago.
Transfield has made more than 100 staff redundant and cut its full-year profit guidance, before at least about $6 million in impairments, by almost a third to between $62 million and $65 million from a forecast of between $85 million and $90 million.
"It's important to understand that the slowdown in the mining sector is really about the slowdown in investment, it's not about the slowdown in production," Mr Hunt told ABC TV's Inside Business.
The industry would still hold up well beyond the next 10 to 15 years for those mining services companies exposed to the mine's life, and to that of oil and gas projects, rather than just building them, he said.
"You need to [remember] that there has been a huge investment, which needs to be operated and maintained, which is going to create jobs, create revenue and cash flows and profit flows for the companies that are involved," he said.
Transfield's gearing - the use of debt financing compared with shareholders' funds - is expected to be 45 per cent at June 30, up from 39 per cent at December 31.
It wants to lower its gearing to between 20 per cent and 30 per cent in the medium term.
Mining accounts for less than half of Transfield's business, meaning that its other infrastructure, property and hydrocarbon businesses are not performing well enough either. "We are seeing some slowing in some other sectors, particularly in the processing and manufacturing sectors, where we also do work," Mr Hunt said.
"We need to reduce our working capital and reduce our debt and we'll do that by the asset and business sales that we flagged following our strategic review in February, and by reducing our working capital and by better execution in our operations."