Shaft Sinkers has sinking feeling

Share in underground construction group Shaft Sinkers fell after it reported a disappointing first half and said it was uncertain about hitting full year profit targets.

Revenue of £100.4m was 10.6% lower than in 2011, which the company blamed largely on operational issues in South Africa, including the death of a member of staff.

Profit from operations fell short of managements' mid-year expectations, dropping from £6.22m last year to £1.07m.

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The company's shares fell 11% following the announcement.

Despite the lower results for the first 6 months of 2012, the firm declared an interim dividend of 2.4p, which it said reflected "its confidence in the group's ability to generate progressive earnings over time".

The company blamed the results on lower than expected ramp up of the mining development and shaft equipping contracts at its Impala 16 site, which it said was attributable to logistical problems at the shafts.

Both these operations are serviced through the ventilation shaft which, in its current sinking configuration, was hampering operational efficiency, it said.

The fatality at its Impala 17 shaft in June also resulted in a prolonged stoppage.

Chief Executive Alon Davidov said that despite a disappointing first half of the year, the board was optimistic that the second half will produce an improved performance, and expected to meet expectations for revenue for the full year.

"However, although the lumpiness of our business makes the full year outlook difficult to forecast, it is uncertain that the company will fully make up the first half profit shortfall caused by the operational difficulties and delays to commencing new projects."