Shares in Emeco Holdings surged after the mining equipment supplier posted a solid performance in the December quarter, with fleet utilisation numbers up and positive earnings results.
Perth-based Emeco said the quarterly result was driven by the realisation of benefits from the company’s ongoing cost-saving measures, and improved performance in its Australian operations.
Emeco’s revenue increased from $42.5 million in the first quarter of the 2017 financial year to $46.5 million in the three months to December, with first-half earnings before interest and tax result representing its first half of positive earnings before interest and taxes since FY13.
Emeco finished the quarter with $34 million in cash at bank.
The company also hinted at signs of a recovery in the market with an increased level of its equipment deployed during January, coupled with a number of project wins during the six months to December.
Emeco’s group utilisation averaged 85 per cent in the quarter, up from 75 per cent in the previous corresponding period, with operating utilisation averaging 53 per cent, up from 42 per cent over the same previous period.
At 11:30am, Emeco shares were trading 18.3 per cent higher, to 8.4 cents each.
“Notwithstanding the significant amount of work performed during the period on the recapitalisation and merger transactions, our team has remained focused on the delivery of operational excellence and cost management, a testament to the depth of our management team,” Emeco managing director Ian Testrow said.
“The operational improvements Emeco has made in the past 18 months, with the resultant improvement in EBITDA margins to 42 per cent from 19 per cent in the prior corresponding period, proves a strong future growth platform for the merged Emeco, Orionstone and Andy’s businesses.
“In addition, we have achieved a number of key recent wins in our Western Australian business during the quarter, through leveraging our leading fleet capabilities, innovative technology offering and value added services to capture these opportunities.”
He said although there were some very early signs of market improvement, any recovery was expected to be gradual and in line with the cautious approach Emeco had seen from its customers.
“In addition, our integration plans for the merger of Orionstone and Andy’s are well advanced and we look forward to the completion of these mergers in H2FY17,” Mr Testrow said.
