Capital Drilling dives on profit warning

Shares in Capital Drilling fell heavily after quarterly results came in below market expectations and the company said this would impact full year results.

The developing markets drilling firm blamed budget constraints being faced by many of its clients, 70% of which are large blue chip mining "majors".

This hit both revenues and margins in the three months to the end of September.

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The company was also impacted by temporary industrial action in Egypt, as well as a weaker than expected performance in Tanzania, two key countries in which Capital Drilling generates around 40% of its total revenues.

Capital said as a result of the impacts during the third quarter, full year revenues were expected to come in just below consensus forecasts for 2012.

It also warned of lower than consensus full year margin performance and a consequent impact on profit.

Chief Executive Geoff Fardell said whilst net margins were lower in the last quarter than consensus forecasts, the company had initiated cost reduction and efficiency programs to improve margins.

"We continue to monitor market conditions and at the same time we are seeing tender opportunities, and are confident that these new opportunities and the delivery of cost efficiencies, which began in the third quarter, will flow through in future periods," he said.

Shares were down 11.7% at 09:00 following the announcement.