Ending the half-year with a profit warning was less than ideal for mining specialist Shaft Sinkers as a combination of logistical problems, fatalities and delayed work hampered its operations and slashed operating profits by 75 per cent to just £1.7m. Sentiment towards the sector is at rock bottom after the tragic shootings at Lonmin's Marikana mine, coupled with a general sense that the resources boom is in abeyance.
Operational problems in South Africa dominated these results. Delays at the Impala 16 shaft, a fatality at Impala 17 that resulted in a prolonged stoppage and a low-value contract at Karee 3 contributed to profit margins falling from 17 per cent to 10.5 per cent. In addition, an absence of higher-value work as capital expenditure budgets were cut was also a factor in the fall. On the positive side, the order book was higher at £348m, up from £301m at the year-end, but about half of those orders are dependent on under-pressure platinum projects. Management conceded that the lumpiness of its business made forecasting difficult, but it is uncertain whether it can make up the lost ground in profit terms in the second half.
Broker Westhouse Securities cut its forecast for pre-tax profits by 30 per cent to £7.1m, giving a reduced EPS of 10p, previously 14.9p.
SHAFT SINKERS (SHFT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 63p | MARKET VALUE: | £29.9m | |
| TOUCH: | 62.5-65p | 12-MONTH HIGH: | 148p | LOW: 38p |
| DIVIDEND YIELD: | 11.4% | PE RATIO: | 6 | |
| NET ASSET VALUE: | 96p* | NET DEBT: | 19% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 112 | 6.22 | 8.50 | 2.40 |
| 2012 | 100 | 1.07 | 1.60 | 2.40 |
| % change | - | - | - | - |
Ex-div: 5 Sep Payment: 5 Oct *Includes intangible assets of £3.4m, or 7p a share | ||||
