Engineering services provider Ausenco Ltd and contractor NRW Ltd, have both issued earnings downgrades because of contract delays and deferrals.
Ausenco said yesterday it now expects to achieve net profit of between $40 million and $43 million for calendar 2009, down from record earnings of $56.3 million for 2008, which was up 35% on 2007’s figure.
The company anticipates revenue of between $475 and $525 million this year, down sharply from 2008’s $607 million.
"The deferment of some projects in late 2008 and early 2009, and delays in the awarding of expected contracts have led us to revise performance guidance for 2009," the company said.
Chief executive Zimi Meka said Ausenco had a strong project pipeline and was tendering for more work than in previous years.
"This guidance follows a review of contracts which are underway and those that were expected to be won over the balance of the year.
"The deferment of some projects in late 2008 and early 2009, and delays in the awarding of expected contracts have led us to revise performance guidance for 2009. Mr Meka said in the statement to the ASX.
"However, clients are taking longer to make decisions on how to proceed with projects and this has resulted in delays of up to five months beyond normal tendering processes," Mr Meka said.
"Ausenco has made reductions in the group’s cost structure in response to these delays."
Ausenco shares hardly blinked at the news: they were down 2 cents at $3.36 at the close yesterday.
And NRW Holdings Ltd expects its annual profit to be in line with the previous year, following delays in the awarding of major contracts. The Perth based contractor to the resources industry forecast a flat 2009 profit of between $30 million and $35 million.
The guidance is based on expected revenue of $510 million to $515 million for the year.
In 2007/08, NRW made a reported net profit of $32.8 million on revenue of $471.2 million.
The company said its contracts with BHP Billiton ltd and Citic Pacific aren’t expected to make a contribution to profit until the first half of the next financial year.
"NRW’s outlook remains optimistic considering current economic conditions and affirms the view that contracted work to date places the company on a secure footing for 2010 and beyond," it added.
"Contracted revenue for FY2010 is currently estimated at $450 million comprising both new and existing contracts," the company said it its statement to the ASX.
"NRW’s outlook remains optimistic considering current economic conditions and affirms the view that contracted work to date places the Company on a secure footing for 2010 and beyond.
"Notwithstanding the difficult operating environment the Company is pleased to advise that it has had no redundancies and has actually recorded an increase in its workforce."
NRW shares lost more than 11% in value on the downgrade and closed at 78 cents, a loss of 10.5 cents.
