(Reuters) - Britian’s Fenner Plc (FENR.L), 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 .FTMC.
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 added.
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 burnt.
“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 GMT.
“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.
Additional reporting by Karen Rebelo in Bangalore; Editing by Sunil Nair