Boart Longyear’s shares rose sharply after it confirmed its profit guidance and said it was surprised at how well it had absorbed the current economic turmoil.
The drilling services and products provider on Thursday confirmed its financial guidance and said strong demand in November and December could result in it exceeding revenue and profits.
The company expects revenue in calendar 2011 to be $US1.9 billion ($A1.90 billion), up 29 per cent from 2010 and on par with 2008 levels.
Earnings before interest, tax, depreciation and amortisation (EBITDA) is forecast to be $US330 million ($A329.98 million).
Its shares enjoyed the biggest rise among the ASX’s top 100 stocks, climbing 30 cents, or 10.1 per cent to $3.27 on Thursday.
Chief executive Craig Kipp said he had not seen any weakening in demand from majors or junior miners despite the global debt problems.
The comments were in contrast to the bosses of mining giants Rio Tinto and BHP Billiton, who said this week they might shelve expansion plans due to the global downturn.
“We’d been expecting some volatility here but we just haven’t seen it, we’ve been looking hard,” he told AAP.
He believed the financial crisis of 2008 was more liquidity based but this time resources companies were cashed up and had raised a lot of equity recently.
“Everybody’s remaining positive on the fundamental global demand for copper and iron and gold, which is mostly what we drill for,” he said.
The company had negotiated 40 to 50 per cent of its contracts for 2012 and was already seeing strong demand for next year and “very good pricing”, which was offsetting higher labour and materials costs.
Mr Kipp said Boart was using a more conservative utilisation strategy, employing about 75 per cent of its equipment capacity, as it had been too costly using more in the lead-up to the GFC.
In a release to the market on Thursday, the company spruiked the positive effects of three recent initiatives, including providing financing to customers that want to lease its drilling equipment.
It has also expanded its rig fleet for mine water services (removing water for deeper mining) and sonic equipment sales.
Mr Kipp said changing Boart’s capital structure this year had also been a huge advantage in building up inventory and utilising working capital, with it refinancing bank debt with a facility for up to $US250 million ($A227.81 million).
