Australian mining and resources sector contractors are suffering with major customers deferring projects as commodity prices fall and costs rise

Transfield Leads Slump in Infrastructure Providers: Sydney Mover

Transfield Services Ltd. (TSE) plunged to the lowest in 12 years in Sydney, leading a slump in mining and infrastructure contractors, after cutting its earnings forecast amid a slowdown in mining and processing activity.

Transfield fell 24 percent to 97 Australian cents, the lowest since May 3, 2001. Fleetwood Corp., which sells and rents portable buildings to infrastructure and mining customers, tumbled 25 percent after saying yesterday that second-half earnings will be below the first half amid a “softening resources sector.” The two companies were among the three worst performers in the benchmark S&P/ASX 200 (AS51) Index.

Mining and resources sector contractors are suffering with major customers deferring projects as commodity prices fall and costs rise. BHP Billiton Ltd. (BHP), the world’s largest mining company, is targeting an 18 percent cut to capital spending in fiscal 2014, its new chief executive, Andrew Mackenzie, said May 14. Rio Tinto Group is seeking to cut $2 billion in costs this year across its mining and corporate offices.A slowdown is continuing in the mining and process industries and customers are “showing increasing cost and capital discipline,” Transfield said in a separate statement today for a presentation by Chief Executive Officer Graeme Hunt.

Net profit after tax and before amortization and one-time items may be A$62 million ($61 million) to A$65 million in the 12 months to June 30, the Sydney-based company said today in a statement. That compares with its previous estimate of A$85 million to A$90 million.

Ausdrill Ltd. (ASL), which operates drill rigs and provides blasting services for companies including BHP and Rio Tinto, slipped 2.8 percent to A$1.24. Monadelphous Group Ltd. (MND), which has construction and maintenance contracts with companies including Rio Tinto, fell 4.7 percent to A$16.60. UGL Ltd. (UGL), an Australian infrastructure contractor which lowered its profit forecast on May 15, fell 0.7 percent to A$7.30.

To contact the reporter on this story: David Stringer in Melbourne at dstringer3@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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