It seems that all is not lost in the mining services industry. Shares of Sedgman Limited (ASX: SDM) surged 15.6% higher today to trade at 78 cents after the company, which provides mineral processing and various other services to the global resources industry, provided an updated profit guidance.
The company said it expects to report net profit after tax (NPAT) in the range of $16 million to $17 million for the 2015 financial year, which compares to the $7.7 million net loss after tax reported during the 2014 financial year.
Sedgman attributed this result to its "disciplined focus on cost control across the business" as well as the strong performance of both the Projects and Operations businesses. Furthermore, it has attained $292 million of EPC (Engineering, Procurement, Construction) Project work, whilst also renewing operating contracts at Mount Isa, Agnew and Sonoma.
Today's rally tops off a strong 12-month period for the company, over which time its shares have risen 56%. That compares favourably to the ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) which has gained just 2.9%, together with the 5.9% and 76.7% declines recorded by fellow mining services companies Monadelphous Group Limited (ASX: MND) and Bradken Limited (ASX: BKN), respectively.
Although there will no doubt be some companies that manage to dodge the headwinds facing the mining services industry, the industry itself is destroying shareholder value as miners increasingly take their services in-house. Investors would be wise to look in industries with more attractive economics to invest their funds into.
