Mining engineer and project management company Lycopodium has lifted its first-half profit by 26.2 per cent to $12.8 million.
Mining engineer and project management company Lycopodium has lifted its first-half profit by 26.2 per cent to $12.8 million.

UPDATE 2.25pm: Lycopodium has slashed its full-year profit guidance by more than 50 per cent to just $4 million after tax.

The engineering and project management consultancy said the reduction in demand for its services in the mining sector had been more rapid and pronounced than previously anticipated.

"As a result, Lycopodium is now forecasting a material reduction in annual net profit after tax to $4 million, from our previous forecast of $9.5 million, reflecting a second half loss of $2.3 million," the company warned in a statement.

Lycopodium blamed a slower than expected ramp-up in both committed and new work; deferral, scaling back and reassessment of a number of studies and projects by its clients; tougher competition for work and a consequent reduction in margins.

The company noted the ongoing difficulties for junior miners to raise equity for studies and projects, ongoing austerity measures by the major mining companies and a reduction in opportunities in the manufacturing sector.

The company said it had also taken a $3.6 million redundancy charge in downsizing the business to better align with its existing workload.

"We have previously advised that subdued conditions are anticipated for 12-18 months and we will continue to adjust our business in order to remain competitive through this period," Lycopodium said.

"Our balance sheet remains in a strong position and our debt position remains very low."

Shares in Lycopodium slumped 43 cents, or 14.78 per cent, to $2.48 at the close.

The West Australian

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