Transfield slumps to $247m loss in first half
TRANSFIELD SERVICES has slumped to a $247 million first-half net loss and slashed its interim dividend after hefty writedowns from the troubled mining arm of its Easternwell drilling operations.
The mining and construction contractor also cut its full-year net profit guidance, before adjustments, to between $85 million and $90 million due to the $284 million pre-tax impairment, first flagged last week. The first-half loss compares with a $32.7 million profit a year earlier.
But while the writedowns were well-flagged, investors were concerned with the company's outlook, which signalled continued weakness in parts of its US market.
"The decline in earnings in Easternwell arising from the weak minerals exploration market, and the impact on Timec from the slow economic environment in US refining, is expected to continue in the short term," Transfield said in a statement to the stock exchange.
Shares in Transfield fell 11.5¢, or 6 per cent, to $1.82 on Tuesday.
Chief executive Graeme Hunt said Transfield would look to sell non-core parts of the group, after undertaking a portfolio review since his takeover from Peter Goode last year.
These include Easternwell's mining exploration and marine businesses, the majority of Transfield's Middle East and Asia operations, as well as its 20 per cent stake in Ratch Australia.
Easternwell's remaining stronger-performing businesses will be integrated into the rest of Transfield's resources and energy division under the restructure.
Transfield declared an unfranked interim dividend of 3¢ a share, payable on May 1. This was down from 5¢ a share in the previous corresponding period.
Transfield said it expected earnings to recover next year by it cutting costs and increasing productivity, and refocusing its strategy to focus on high-value asset maintenance in the energy and infrastructure sectors, including government outsourcing.
The group has cut 270 jobs and reduced capital expenditure by 25 per cent since Mr Hunt was appointed.
Transfield's first-half net profit, excluding impairments and amortisation, was 38 per cent lower at $26.9 million, compared with the previous corresponding period.