Boart Longyear to close Perth operations
Boart Longyear to close Perth operations

UPDATE 1.20pm: US-based drilling company Boart Longyear will move its Perth operations overseas to cut costs as it announced another earnings downgrade.

The company's manufacturing operations in Forrestfield would be moved to an existing facility in Poland and other locations, Boart Longyear said.

The company officially opened its 6000sqm manufacturing plant in Forrestfield in February last year. It is understood about 100 people were employed at the plant which manufactures exploration drill rigs and tooling equipment for reverse circulation drilling.

Boart Longyear said at the opening of the plant that it would consolidate and expand its manufacturing and engineering capability in WA to meet increasing Australian customer demand and to service the needs of a growing export market throughout the Asia Pacific region, Africa and the Americas.

Today, Boart said the relocation was part of a plan to cut annual costs by about $US70 million ($A68.08 million), or 20 per cent of its total overheads, as it deals with lower demand.

The savings initiatives were expected to cost $US15 million to $US20 million ($A14.59 million to $A19.45 million), the company said, but offered no further information on the number of job loses.

Chief executive David McLemore said the company's earnings forecast had been reduced because margins were not being achieved because of delays in staff reductions.

Boart Longyear now expects earnings before interest, depreciation and amortisation (EBITDA) in the 2012/13 financial year in the range of $US310 million to $US320 million ($A301.51 million to $A311.24 million).

That is down from its previous forecast of $US360 million to $US390 million ($A350.14 million to $A379.32 million), most recently confirmed in October.

"Revenues are broadly consistent with expectations, but margins in drilling services have been impacted due to timing of cost take-outs associated with headcount reductions," Mr McLemore said in a statement.

ASX-listed Boart Longyear shares closed up 10.5 cents, or 8.11 per cent, at $1.40.

The West Australian

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