More than $123 million has been wiped from the market value of mining services firm Ausdrill after it said full year profit would fall heavily due to lower spending by the mining industry.
Ausdrill, one of Australia's largest drilling companies, expects to make a net profit of between $35 million and $45 million in the 2013/14 financial year.
It made a profit of $90.4 million in 2012/13, which was down 19 per cent from the previous year.
Ausdrill shares dropped 39.5 cents, or 28.7 per cent, to 98 cents, reducing its market value to $306 million.
The company expects a weaker performance in 2013/14 due to a reduction in mining production volumes, subdued exploration activity and a surplus of mining equipment hire in the sector.
A reduction in capital spending, weakness in some commodities prices and a delay in the commissioning of rigs would also affect the business, it said.
"The weaker than expected outlook reflects a continuation of the challenging market conditions which are expected to remain subdued until the beginning of 2014 when an improvement in selected markets is expected to occur," Ausdrill said in a statement.
The company anticipates its first half profit will be lower than in the second half of the financial year, as new work will not take effect until calendar 2014.
Still, Ausdrill says it remains in a sound financial position, but conceded the forecast was "not acceptable, even in these challenging times".
It expects the focus by the mining industry on deferring all non-essential expenditure including capital works, exploration programs and non-critical maintenance will taper in the near future.
Ausdrill's profit forecast excludes the effects of one-off financial items and the impact of any fluctuation in the value of the Australian dollar.
Credit rating agency Standard and Poor's has placed Ausdrill's long term rating of BB on watch, with negative implications.
The company provides services including drill and blast, exploration, procurement and logistics in Australia, the United Kingdom and Africa.
Several other mining services companies have downgraded earnings forecasts this year, including WorleyParsons.
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