Major Drilling reports Q1 loss of $7.3M as revenue plummets 38% to $67.6M

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MONCTON, N.B. – Major Drilling Group International Inc. (TSX:MDI) has reported a fiscal 2015 first-quarter loss of $7.3 million, citing a 38 per cent drop in year-over-year revenue.

The loss, which translated to nine cents per share, compared with a profit of $1.5 million or two cents per share in the comparable year-earlier period.

The Moncton, N.B.,-based contract driller said revenue fell to $67.6 million from $108.2 million in the year-earlier period.

“In the quarter, revenue and margins reflected the impact of the lowest pricing that we have seen in 15 years,” president and CEO Francis McGuire said in a statement on the company’s results.

“As senior mining houses focus on cutting costs, they are more likely to defer specialized drilling projects, which are more expensive by nature. The company, therefore, finds itself competing more often on a pure price basis and management has to find the optimum balance between price and volume.”

McGuire added that in a number of jurisdictions uncertainty as to the policies of host governments or issues around land tenure continued to have an impact on activity.

“With decreasing prices, our margins continue to be affected as we struggle to improve productivity beyond all the gains we have been able to make over the last 18 months. These levels of pricing are not sustainable beyond the medium term as it will affect the capacity of the industry to maintain the quality of its equipment,” he added.

McGuire noted that the quarter’s margins were also affected by higher than normal repair costs as Major Drilling continued to prepare rigs to be able to respond rapidly to any customer requests.

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