Investors took the long handle to a couple of stocks yesterday - vitamins group Blackmore’s was one; heavy equipment hirer, Emeco Holdings was another despite producing a $12 million profit for the six months to December.
Morgans observes the completion of contract mining operations (lower margin) was the driver for increased profitability in the second quarter. Operating earnings were up 15%, at a margin of 43% versus a margin of 35% in the first quarter.
Emeco posted a complicated result due to the merger with its two largest competitors, and recapitalsation, but the fourth quarter signalled the merged entity’s potential, the broker suggests. No formal guidance was offered other than a strong outlook.
It’s probably best interpreted as yet another sign of the times but the Mt Muro mine in Indonesia has been placed on care and maintenance and this means Emeco’s operations in the country take a big hit. Making matters worse, Macquarie notes the Australian operations are going through their own tough times.