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Boart Longyear to close Perth operations
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Tuesday, 20 Nov 2012

AAP reported that US based drilling company Boart Longyear will move its Perth operations overseas to cut costs as it announced another earnings downgrade.

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

The company officially opened its 6000 square meter 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 at the opening of the plant said 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.

It said that the relocation was part of a plan to cut annual costs by about USD 70 million, or 20% of its total overheads, as it deals with lower demand. The savings initiatives were expected to cost USD 15 million to USD 20 million, but offered no further information on the number of job loses.

Mr David McLemore CEO of Boart Langyear said that 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 amortization in the 2012/13 financial year in the range of USD 310 million to USD 320 million. That is down from its previous forecast of USD 360 million to USD 390 million, most recently confirmed in October.

Mr McLemore in a statement said that "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."

Source - AAP


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