France's Foraco Q2 profit falls on inflation in labor, drilling consumables
France's Foraco Q2 profit falls on inflation in labor, drilling consumables
Overview
France-based mineral drilling firm's Q2 revenue rose 22% yr/yr on strong demand in Americas
Company's Q2 net profit fell yr/yr due to inflation and ramp-up costs for new contracts
Foraco is revising contract pricing to offset inflation and expects margins to improve
Outlook
Foraco expects margins to progressively improve as price adjustments and efficiencies take effect
Company sees sustained customer demand and increasing backlog supporting future activity
Foraco expects profitability to improve as contractual price adjustments are implemented
Result Drivers
AMERICAS GROWTH - Revenue growth was driven by strong activity and new long-term contracts in Canada, the United States, and South America, especially Brazil
INFLATIONARY PRESSURE - Profitability was impacted by inflation in labor and drilling consumables, with a lag in contract price adjustments
CONTRACT RAMP-UP COSTS - Start-up and ramp-up of several large long-term contracts diluted margins due to mobilization costs and lower initial operating efficiency
Company press release: ID:nCNWY7lSHa
Key Details
Metric | Beat/Miss | Actual | Consensus Estimate |
Q2 Revenue | Beat | $84.52 mln | $79.80 mln (2 Analysts) |
Q2 Net Income |
| $4.008 mln |
|
Q2 EBITDA |
| $15.02 mln |
|
Q2 Gross Profit |
| $13.06 mln |
|
Q2 Operating Income |
| $7.62 mln |
|
Analyst Coverage
The current average analyst rating on the shares is "strong buy" and the breakdown of recommendations is 4 "strong buy" or "buy", no "hold" and no "sell" or "strong sell"
The average consensus recommendation for the mining support services & equipment peer group is "buy."
Wall Street's median 12-month price target for Foraco International SA is C$4.50, about 95.7% above its July 30 closing price of C$2.30
The stock recently traded at 7 times the next 12-month earnings vs. a P/E of 8 three months ago
Reuters Recommended Reads
July 30 - Canada's Stampede Drilling Q2 revenue jumps 204% on higher rig utilization
July 29 - Canada's Precision Drilling Q2 revenue tops estimates on higher rig activity
July 29 - Patterson-UTI Energy Q2 revenue rises on higher drilling activity
For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.
(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)