CARDNO SLUMPS 27%, CALLS ON GOVERNMENT

CARDNO SLUMPS 27%, CALLS ON GOVERNMENT

CARDNO Limited (ASX: CDD) has incurred a 27 per cent profit slump, with reduction and uncertainty in the resource and infrastructure spaces the key catalysts.

The infrastructure and environmental services company's NPAT for the half year period to December 2014 was $31.5 million, down from $43.1 million the prior corresponding period. This was from a revenue that was up 8.4 per cent from that period to $686.1 million.

CDD employs approximately 8000 staff and has cut around 100 jobs in the past half year.

Despite the drop, CDD acting CEO Graham Yerbury (pictured) - who has been in the position since mid last month following a sudden exit by Andrew Buckley - notes that today's result measures at the top end of guidance issued in November 2014.

"The factors we identified in November as a drag on our performance largely materialized and in fact continue in the Australian marketplace with reduced activity in the resource sector, the completion of major projects and uncertainty around the pace of infrastructure development," says Yerbury.

He adds that the company's Americas business is boosting confidence for second half results.

"It is encouraging that the backlog for the group is now at record levels, being in excess of $1 billion with almost three quarters of this due to be delivered in the next twelve months.

"This backlog is largely attributable to our Americas business, giving us confidence in the second half result.

"The continued weakness of the AUD/USD exchange rate will also improve our Australian dollar results compared to the prior period."

Yerbury says any substantial pickup in the next half year will depend on infrastructure activity at the State Government level, but the Americas are still showing some organic growth. 

"Looking forward we expect Australian and New Zealand performance to remain subdued for the remainder of calendar 2015 with any substantial pickup dependent on infrastructure activity at the State Government level," he says.

"In the Americas we have indications that there should be some level of organic growth in the next twelve months resulting from improved confidence and increased government and corporate expenditure this may be tempered by sustained low oil prices.

"Margin pressure is expected to continue and we are unlikely to see any significant improvement until fiscal year 2016 when our internal improvement initiatives deliver a reduction in our cost base."
 

 

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