Interesting timing, those drilling concerns from @Pioupiou given that Hughes has proved something of a ‘thorn’ in the side for NRW ..
In the light of what you say Grizzly, it goes towards demonstrating that, wherever in the cycle they may be purchased, they can still be a pain in the neck.
From today’s financial report “
“It became clear during the first half of the financial year that work to improve reliability on drills acquired from Hughes, identified through the due diligence process, had been underestimated. Drill availability was well below expectations requiring additional resources to be deployed to projects in order to maintain production with consequent impact on cost and project margins. Over the last six months the business has developed a more structured drill reliability programme to progressively fix availability. Drills which have been through this process and delivered back to operations have demonstrated significant improvements in reliability and availability. Both operation costs and capital expenditure have increased as a result of the reliability programme, further impacting earnings.”
Happily at the end of the FY, NRW is well on top of things with 40% of the machines overhauled, running better than ever, and (most importantly) achieving new production levels ...but this instance still highlights a number of issues that go beyond old drills.
ie the growth by acquisition/merger road is fraught with potential icebergs as potentially much of the intended purchase is ‘‘under the water ‘ whether its drills or not.
Due diligence is obviously not so simple .
This was shown last year when a peer company bought a transport business which subsequently did not deliver as expected (was that Ausdrill?)
In the case of Hughes I guess one of the problems was East Coast location..
Cheers
(20min delay)
