Transfield Services (TSE) delivers essential services to key industries in the resources and industrial, infrastructure services and property and facilities management sectors.

A leading global provider of operations, maintenance, and asset and project management services, TSE's operations span Australia, New Zealand, the United States, the United Arab Emirates, Qatar, New Caledonia, South East Asia, India, Chile and Canada.

Late August the company released its FY12 results and announced the departure of CEO Peter Goode.

Earnings disappoint

TSE's FY12 results showed a return to profit that fell short of market expectations. The company reported FY12 NPAT profit of $85.0 million which was a swing from the $19.2 million loss a year earlier.

However on an underlying bias NPAT was down 15.1%. Revenue over the period jumped 13.9% to $3.14 billion. Another worrying sign was return on capital employed, which fell to its lowest level in over five years, to 8.8% from 12.4% in FY11.

Easternwell and Goode

Back in December 2010 TSE purchased Queensland-based resources services provider, Easternwell, for $575 million. The business has generally disappointed with FY12 earnings missing the guidance the company provided in April.

The business is going to be under continued pressure as conditions in the mining sector remain subdued on the back demand weakness out of China.

We make mention of the Easternwell business because we think that the incoming CEO may look at writing down some of the $346 million in intangibles assets currently on the books.

Outlook

TSE's underwhelming FY12 results and lacklustre guidance of $125 million -$135 million are not good signs for the company. The share buy-back, which we believe has been underpinning the stock price, has now ended, so that's one piece of support that is no longer there.

Whilst TSE is less leveraged to the mining sector than other service contractors, it has some exposure which will come under pressure. We believe these concerns, combined with the possibility of writedowns in the future, will weigh on TSE's share price in the near-term.

Transfield Services (TSE) Shares To Sell is a post from: Australian Stock Report Share Tips

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