Not sure why I post mostly on my dud investments. Must be...

Not sure why I post mostly on my dud investments. Must be therapy (even though the portfolio overall is fine). But I do appreciate others correcting any wayward logic here.

Some of EHL's 1H13 results are good, some so-so, some embarrassing. Here are my thoughts:

1. The NPAT sat comfortably within the guidance, which is (fairly) good. The dividend (2.5 cents, same as 1H12) was a very pleasant surprise, but it is essentially funded by debt. Apparently positive cash flow in 2H13 will likely offset the current lack of dividend cover. Holding the dividend was likely a wise strategy to maintain the company's market value.

2. Canada, Indonesia, and Chile basically saved EHL from cratering. To put this in perspective, if EHL had not recently expanded overseas, it would be about the same as the bottom of the GFC (about 60% utilization). Why did this debacle occur? Lack of foresight, mainly. There were warning signs last year that both coals were vulnerable, and contractors are close enough to see the warning signs better than the rest of us. So EHL should have transferred equipment overseas then and bought less growth capital (the analysts were right on that point). EHL can be forgiven for the iron and gold contract losses, but not the coal vulnerability.

3. 2H13 will be "slightly" worse than this week's 1H13 result. This stings, but will hopefully be soothed by guidance of improved (or even strong) FY14 results. EHL has good reason to believe the Chilean business will grow, but I would remain cautious about Cdn utilization given past volatility (although possibly smoothed now with more large miner contracts).

4. EHL refers to competitive pressures in OZ. Does this imply that the company needs to squeeze margins because it isn't cost efficient? Where's the economies of scale (EHL presumably being bigger than competitors here)? If this argument continues, EHL needs to rethink its business model. Even chasing higher margins overseas is a short term solution if it can't exceed smaller competitors.

5. The Chilean success (so far) has encouraged further globalization of operations: "we will consider more geographic expansion in order to further extend our coverage of attractive markets around the world". This could be valuable to reduce EHL's revenue vulnerability and share price volatility.

Overall, I think these results will hold up EHL's share price, but the glow of a successful company has likely been postponed for another six months. Let's hope 2H13 dividends are close to last year (but I suspect more like 2.5 cents rather than 3.5 cents) and that 2H13 results report strong FY14 growth.