Mining Services Recovery

Is the Australian mining services industry set to recover? According to The Australian some of Australia’s largest mining and energy companies are poised to deliver a substantial increase in profits in the coming year as an analysis of the earnings of Australia’s 20 largest resources companies confirmed a substantial decline in profitability during the past year as high costs and falling commodity prices destroyed earnings and prompted billions of dollars in asset writedowns.

Alan Kohler from Eureka Report takes a look at the recent strong recovery of the mining services sector, with companies like Ausdrill, Transfield and NRW Holdings posting impressive numbers for the first quarter of this financial year.

Mining services contractor Ausdrill (ASX: ASL) was recently battered by poor investor sentiment, reaching a price of just $0.80 per share this year. At that price, its dividend was around 15% without franking credits! However, at its currently price tag of $1.40, investors can still take advantage of a yield of 12% grossed up. For those believing it could be unsustainable, it pays a 12 cent dividend, but Morningstar expects an EPS of 25.8 cents in 2014.

 

 

Mining Services Recovery