Currently viewing Global edition

Drilling contractor reinstates dividend

International drilling contractor Swick Mining Services has returned to profit for the 2019 financial year.
Drilling contractor reinstates dividend Drilling contractor reinstates dividend Drilling contractor reinstates dividend Drilling contractor reinstates dividend Drilling contractor reinstates dividend

The ASX-listed company (SWK) posted a modest full-year net profit after tax of A$1 million, up from a $1 million loss a year earlier. Group EBITDA was $25.5 million, up 47% on FY18, while group EBIT was $4.6 million, up 929%.

Drilling business revenue was $143 million and EBITDA was $28.2 million, in line with guidance.

The company described the result as the best earnings "in years" for the drilling business, delivering on a strategy of shifting rigs onto better performing contracts or new projects and achieving cost reductions.

The company's $25.1 million operating cashflow before interest and tax represented an EBITDA to cash conversion of 98.5%.

Swick declared a fully franked final dividend of 0.6c per share, its first payout since FY16.

"Our results in FY19 demonstrate the successful implementation of our strategy of targeting improved rates and good cost controls, which have combined to drive a strong improvement in the quality and quantity of our earnings," managing director Kent Swick said.

"This result and positive outlook have enabled the board to return to paying our shareholders dividends, with a fully franked final dividend of 0.6c per share declared.

"This dividend, which is for the full year, marks an intention to return to paying dividends going forward."

The company has a $353 million order book provides strong momentum, with revenue and earnings growth expected into FY20.

Swick had 49 underground drills deployed at the start of FY20, which is expected to increase to 65 during the current half. Revenue from overseas is set to increased due to the ramp-up of Swick's contract at Northern Star Resources' Pogo mine in Alaska and Barrick Gold's Nevada mines.

Swick is targeting 70 rigs in work by the end of FY20.

The company is also working on the development of its specialist DeepEX division, and the Orexplore drill-core scanning technology is due for its first mine site trial in the December quarter.

"With the work in hand and opportunities for additional growth, we are confident of delivering the revenue and earnings growth in FY20 that will underpin ongoing dividends to shareholders," Kent Swick said.

Shares in Swick rose 5.9% to 27c, equal to a 52-week high and valuing the company at more than $60 million.


Most read METS Investor

Most read METS Investor