Emeco profits up, but clouds loom

The company’s profits are 2.9% higher than the same period last year, and in line with earnings guidance of $75-81 million for 2008-09 on an annualised basis. The news gave its shares a 40% or 8.5c boost in mid-afternoon trade to 29.5c. However, the company warned it was feeling the pinch from the economic slowdown and with this pressure intensifying since November, it expected profits to come in somewhere around $65-72 million. And given the economic climate, this figure was also uncertain, the company added. Emeco said it too was experiencing an emerging decline in demand from customers in mining, in particular its customers exposed to base metals and coking coal prices, with some of its customers forced to shut down uneconomic mines. On the upside, its thermal coal, gold and iron customers continued to provide Emeco with a business base, especially customers looking to preserve capital and operating flexibility through renting equipment rather than buying. And the company said the downturn might even be to its advantage as its customers struggle with tighter credit and turn to renting, while the government infrastructure plans were also a positive.Emeco is scheduled to release its interim financial statements on 25 February 2009.

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