FLSmidth has announced it will cut around seven per cent of its workforce, or 11000 jobs, as it lowers forecasts.
The global engineering group announced a surprise 36 per cent drop in second quarter operating profit on Friday. It reportedly booked $64 million in one of costs for its mining engineering division, and expects this to increase to $268 million dollars in more writedowns and one off costs by the end of 2013, according to Reuters.
Mining has been the major cause of these losses, as BHP, FMG, and Rio Tinto slash operating costs.
"We expect mining capex will hit bottom in 2014," FLSmidth chief executive Thomas Schulz told analysts during a conference call.
However, despite the slumping mining industry FLSmidth has still cotninued operation in the sector, recently winning a five year mine maintenance contract in Chile.
In the company's statement, it explained that "as a consequence of a deteriorating outlook for mining investments in general and for the Australian coal industry in particular, impairment tests have revealed indications of impairment amounting to some DKK 800m (AUD$ 159m) in connection with the assets acquired in relation to the Ludowici Group. The impairment loss will impact the EBIT results in Customer Services and Mineral Processing, divided approximately 60/40 between the two divisions".
It added that there has been a "solid performance by all segments but materials handling (which covers the mining sector)".
On top of this, the company also stated that it is reducing global locations by 20, or around 10 percent, however it did not elaborate on where those locations would be.
However it has not giving up on the mining industry entirely, stating that "we consider the recent developments in the mining industry to be a normal business cycle, where we have come off the peak after a number of years of significant growth".
"We expect mining investments to hit the bottom in 2014; [however] with respect to cement we have already been walking on the bottom off the cycle for a couple of years now and se early signs of recovery. In general we expect a flattish market for the next 2-3 years for the three project divisions.
"Ït is important for us to emphasise that this is not an extraordinary situtation, but a normal development in a cyclical industry. We remain optimistic with respect to the mid- and long-term outlook for both the cement and minerals industry,"Schulz said.
The diversified engineering company is also halting the sell off process for its subsidiary Cembrit until European market conditions improve, and is instead developing it as a stand-alone business.