Why did the Emeco (ASX:EHL) share price take a 10% dive today?

The Emeco (ASX: EHL) share price has plummeted 10% this morning. Let’s take a look at the company’s first-half FY21 results.
The post Why did the Emeco (ASX:EHL) share price take a 10% dive today? appeared first on The Motley Fool Australia. –

Two men react in shock at IGO share price drop

The Emeco Holdings Limited (ASX: EHL) share price opened 10% lower today after the company released its half-year report for the period ended 31 December 2020. 

At the time of writing, the Emeco share price is trading down 8.87% at $1.13.

Emeco provides a rental fleet of more than 1,000 machines to mining operations around Australia. The company uses big data to assess projects and provide the necessary machinery for its clients.

How did Emeco go during the first half of 2021?

Emeco reported an operating net profit before tax of $37.7 million for the first half of FY21. This is $3.8 million less than what the company delivered 1H FY20.

Rental revenue also slipped 4.8% to $199.8 million, predominantly due to weaker market conditions in the Eastern region.

The coronavirus pandemic also took a swing at the company’s earnings. 

Operating earnings before interest, tax, depreciation and amortisation (EBITDA) was down 3.5% to $117.9 million. However, this is still at the upper end of the guidance range of $115 to $118 million.

Emeco finalised its acquisition of Pit N Portal Mining Services Pty Ltd and Pit N Portal Equipment Hire Pty Ltd at the 31 December 2020 reporting date.

The company acquired Pit N Portal for $70,802,995 settled by an upfront cash payment of $62,000,000 and Emeco shares issued to the sellers of $9,178,744, less an additional cash payment of $375,749.

Group revenue hiked up 21.2% to $298.6 million for 1H FY21, with the company crediting the Pit N Portal acquisition as being a major player in the jump.


The company believes that the flat rental earnings achieved in the first half FY21 will improve in the second half.

Emeco expects to report growth in FY22.

Supporting this growth will be an idle fleet of equipment in the east being placed into new projects and single shift projects in the west being converted to double shift projects.

Rental flexibility also exists with the company’s ability to relocate its assets as required.

Emeco notes that the company’s workforce is more than 1,000 strong. During the 2021 calendar year, the business will upgrade its employee recruitment, onboarding and training capability. 

The company intends to sustain an FY21 capital expenditure (CAPEX) of approximately $115 million. 

Emeco further advised that the company has been awarded fully maintained projects in coal, starting in the fourth quarter of FY21. A new metals project requiring a wide range of equipment and services for a 5-year contract will also start in late FY21.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why did the Emeco (ASX:EHL) share price take a 10% dive today? appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!