CARDNO DOWNGRADES PROFIT AFTER $200M HIT
Written on the 20 May 2015
CARDNO Limited (ASX:CDD) has downgraded its full year profit forecast, following a $200 million hit as the company devalues its US operations.
The infrastructure and environmental services consultancy has forecast its full year operating net profit after tax to be in the range of $48 million and $51 million.
The guidance falls short of its FY14 result of $78.1 million.
The non-cash impairment charge of $200 million follows Cardno's reassessment of investment in the US and Ecuador. The writedown will not impact its existing debt covenants.
Acting CEO and group CFO Graham Yerbury (pictured)says a number of factors contributed to the company's underperformance, particularly in the second half.
"The past 12 months have been very challenging with the difficult market conditions requiring significant action to improve overall business performance and outlook," Yerbury says.
"We are evaluating all components of our business in the Americas region with a view to improving overall profitability and positioning the business for a return to organic growth."
The company reported continued revenue challenges as a result of the downturn in the Australian mining and oil and gas sectors.
Harsh weather conditions impacted the US business, as well as increased competition in the market and a global slowdown in the demand for oil and gas.
"Despite these near term challenges, we continue to grow our backlog in the Americas and remain optimistic about the performance of the business in the coming year," Yerbury says.
"While it is difficult to pick the bottom of the market we believe that the outlook for our Australian business in the coming year is broadly positive and that we are well positioned to take advantage of any improvement in the economy."
Cardno will release its full year financial statement on August 18.