WATPAC BRACES FOR $50M CONTRACT FALLOUT
Written on the 20 November 2014
WATPAC Limited (ASX:WTP) has forecast a flat profit result this financial year amid uncertainty surrounding one of the company’s major clients.
Iron ore miner Pluton Resources Limited went into administration on October 31, with a potential flow-on effect for the construction company’s services contract at Cockatoo Island.
The project had been expected to contribute approximately $50-$60 million in revenue to Watpac’s national mining and Western Australia civil business unit.
But the company has warned that revenue and profit will be “adversely affected” should mining services works not resume.
Watpac has announced in a statement that full-year underlying net profit after tax is expected to be in line with its FY14 result of $17.85 million.
In the six months ending December 31, Watpac is expected to deliver an underlying profit between $5 million and $7 million.
The updated guidance has been delivered with the assumption there will be no profit contribution from the Cockatoo Island project.
WTP has recently commenced a number of construction projects, with the timing of the profit recognition still to be confirmed.