The Emeco Holdings Limited (ASX: EHL) share price opened 10% lower today after the company released its half-year report for the period ended 31 December 2020.
At the time of writing, the Emeco share price is trading down 8.87% at $1.13.
Emeco provides a rental fleet of more than 1,000 machines to mining operations around Australia. The company uses big data to assess projects and provide the necessary machinery for its clients.
How did Emeco go during the first half of 2021?
Emeco reported an operating net profit before tax of $37.7 million for the first half of FY21. This is $3.8 million less than what the company delivered 1H FY20.
Rental revenue also slipped 4.8% to $199.8 million, predominantly due to weaker market conditions in the Eastern region.
The coronavirus pandemic also took a swing at the company’s earnings.
Operating earnings before interest, tax, depreciation and amortisation (EBITDA) was down 3.5% to $117.9 million. However, this is still at the upper end of the guidance range of $115 to $118 million.
Emeco finalised its acquisition of Pit N Portal Mining Services Pty Ltd and Pit N Portal Equipment Hire Pty Ltd at the 31 December 2020 reporting date.
The company acquired Pit N Portal for $70,802,995 settled by an upfront cash payment of $62,000,000 and Emeco shares issued to the sellers of $9,178,744, less an additional cash payment of $375,749.
Group revenue hiked up 21.2% to $298.6 million for 1H FY21, with the company crediting the Pit N Portal acquisition as being a major player in the jump.
The company believes that the flat rental earnings achieved in the first half FY21 will improve in the second half.
Emeco expects to report growth in FY22.
Supporting this growth will be an idle fleet of equipment in the east being placed into new projects and single shift projects in the west being converted to double shift projects.
Rental flexibility also exists with the company’s ability to relocate its assets as required.
Emeco notes that the company’s workforce is more than 1,000 strong. During the 2021 calendar year, the business will upgrade its employee recruitment, onboarding and training capability.
The company intends to sustain an FY21 capital expenditure (CAPEX) of approximately $115 million.
Emeco further advised that the company has been awarded fully maintained projects in coal, starting in the fourth quarter of FY21. A new metals project requiring a wide range of equipment and services for a 5-year contract will also start in late FY21.