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Transfield Services Limited shares sink 9% – here’s what investors need to know

It’s certainly been a rollercoaster ride for shareholders in Transfield Services Limited (ASX: TSE) this week. As reported here, the contract service provider received a significant boost to its fortunes on Monday when the firm announced it had been successful in securing a 20-month contract valued at $1.22 billion. The announcement sent the stock up to around the $1 mark – well above the 66 cents per share it was languishing at back in June 2013.

However today’s release of the company’s half-yearly results appears to have tempered the enthusiasm, with the share price dropping around 9% and shares now back under 90 cents.

Here are some key features of today’s results release:

  • Decline in revenue of 2% to $1.79 billion
  • EBITDA margins decline from 4.2% to 4%
  • Underlying NPAT (pre amortisation) of $9.9 million
  • No interim dividend declared
  • Net debt increased by $91 million to $639 million
  • Guidance for full-year 2014 NPAT (pre amortisation) of between $65 million and $70 million

Foolish takeaway

Investing in the mining services sector continues to cause headaches for investors and there is plenty of cause for concern in Transfield’s results today. However if the company does manage to meet its full year-guidance there is reason to suspect the share price will once again head higher.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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