(Adds CEO comment, details, shares)
By Richa Naidu
May 30 Britian's Fenner Plc, a maker of
conveyor belts for the mining industry, warned it might miss
market expectations for full-year profit as troubled U.S. coal
miners continue to defer spending on maintenance.
Shares in the London-listed company tumbled more than 15
percent on Friday morning, making it the top percentage loser on
the FTSE 250 index.
Fenner, which has been struggling with a slowdown in the
global mining industry, also blamed the missed forecast on its
failure to clinch an Australian iron ore contract worth between
2 million pounds and 2.5 million pounds, a "relatively large"
deal for the company.
It said underlying pretax profit would be 10 to 15 percent
lower for the year ended Aug. 31 relative to Bloomberg's current
pretax profit estimate of 77.6 million pounds ($129.72 million).
"The lion's share of this impact has to be attributed to
North America," Chief Financial Officer Richard Perry said on an
analyst call. Underlying pretax profit was expected to be flat
in 2015 at Fenner's North American conveyor belt business, he
The company reported underlying pretax profit of 86.9
million pounds last year.
Fenner blamed coal prices in the United States that were
being kept low despite an increase in the amount of coal being
"Miners' spending on goods and services including belts has
shown no sign of picking up, with much maintenance expenditure
still being deferred wherever possible," Chief Executive
Nicholas Hobson said.
He declined to name the miner that passed Fenner over for
the Australian contract or the competitor that won it.
"I have to say we are somewhat confused and bemused as to
why we were not awarded that contract. We had effectively been
told by the customer that our name was on the drawing and we
were going to receive that order," Hobson said.
Shares in Fenner were down 12.2 percent at 343 pence at 0846
"The shares are likely to react badly in the short term to
this disappointing result and we temporarily move our forecast
and rating to being under review," FinnCap analyst David Buxton
wrote in a note, adding that the brokerage was likely to reduce
its 2015 profit forecast by around 9 million pounds.
Fenner said last month that a pick-up in orders from
Australia had been helping it cope with slow demand from the
U.S. coal market.
It has also been counting on contracts from newer markets
such as South America, the Middle East and Africa to compensate
for the U.S. shortfall and weakness in other markets such as
Russia, Ukraine and Britain.
($1 = 0.5982 British pounds)
(Additional reporting by Karen Rebelo in Bangalore; Editing by