Major Drilling Q3 loss triples as revenue falls 42 per cent from year before

MONCTON, N.B. – Major Drilling Group International Inc. (TSX:MDI) says its third-quarter revenue dropped 42 per cent and its loss tripled as major customers delayed decisions on their 2014 exploration programs.

The Moncton, N.B.,-based company reported a net loss of $12.8 million or 16 cents per share, up from $4.2 million or five cents per share a year earlier.

Revenue for the three months ended Dec. 31 fell to $71.8 million, down from $123.2 million a year earlier.

Despite the weak quarter, Major Drilling says it’s in good financial position, with $33.6 million of cash after debt expenses.

Its semi-annual dividend remains 10 cents per share, payable May 1.

Major Drilling provides contract services to mining and minerals companies around the world.

Demand for many commodities has been reduced by slowing growth in Asia, a weak European economy and slow growth in the United States — pushing down prices and increasing uncertainty.

Major Drilling president and CEO Francis McGuire said the company had anticipated that its customers would be slow in deciding on their 2014 calendar year drilling plans.

“This has led to reduced activity levels as compared to the third quarter last year, and produced a seasonal loss as anticipated,” McGuire said in a statement.

He added that the devaluation of the Argentine peso also created a foreign exchange loss of $3.3 million as Major Drilling converted some of its pesos to American dollars.

McGuire said the uncertainty continued into Major Drilling’s fourth quarter and pricing for its services is under pressure.

“On the other hand, in many regions we are seeing encouraging signs of increased inquiries, especially from gold customers, which if they result in successful bids, would generate higher activity levels in the second half of this calendar year,” McGuire said.

“We feel we are in a strong position to react quickly when the industry begins to recover as the company’s financial strength has allowed it to invest in safety, to maintain its equipment in excellent condition and to retain many of its skilled employees.”

Note to readers: This is a corrected story. An earlier version incorrectly identified Major Drilling president and chief executive Francis McGuire.