Matrix Composites & Engineering (ASX: MCE) has released a trading update for the financial year ending June 2013 and it's not pretty. While back in February the company expected to report earnings before interest, tax, depreciation and amortisation (EBITDA) of $13 million, now the company is expecting EBITDA of only $8 million.
The slowdown in mining construction was unsurprisingly a stated reason for the downgrade; however a $2 million expense relating to a miscalculation of superannuation payments for Matrix's workforce is also part of the cause. The company stated the system error which caused the miscalculation was now fixed.
Matrix's downgrade adds to the pain already being experienced within the sector. Other mining service companies to already lower their earnings expectation include NRW Holdings (ASX: NWH), Worleyparsons (ASX: WOR) and Emeco Holdings (ASX: EHL).
Foolish takeaway
It's no understatement to describe the sector as a bloodbath. Investors looking to own high yielding stocks need to be careful if they are sifting through the mining services sector for high dividend opportunities. Many of these companies will be forced to pay lower dividends next year, making their forward yields much lower than their trailing yields.
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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.
