wa business

Emeco soars on earnings forecast
11-February-09 by Rebecca Lawson




Shares in Emeco Holdings soared after the earthmoving equipment provider foreshadowed a record interim result and full year earnings in line with expectations.

Shares in Emeco leapt 10.5 cents, or 50 per cent, to 31.5 cents.

The company said it expected 2008/09 net profit would be between $65 million and $72 million, "broadly in line with average consensus estimates of approximately $70 million" and earnings of $67.5 million for the previous financial year.

Emeco also said it expected a record net profit of $39.1 million for the six months to December 2008, a 27.9 per cent jump on the same period last year.

The company said the expected increase reflected a strong operational contribution from its businesses in Australia, Canada, Indonesia and United States.

Emeco said tighter operating conditions where customers would rather rent than buy equipment, plus the federal government's keenness to invest significantly in infrastructure, bode well for its equipment rental business.

The company said it was experiencing a decline in demand from customers exposed to base metals and coking coal, and from customers forced to close mines because falling commodity prices had made them uneconomic.

These pressures had been offset partly by demand from customers exposed to thermal coal, gold and iron ore and those seeking to preserve capital and operating flexibility by renting earthmoving equipment.

"However, Emeco expects some earnings volatility in the short term as customers continue to adjust to the current operating environment," it said.