Transfield Services has hit the impairment warning button for the market ahead of releasing its full year figures next month.
The company yesterday warned that its full year results would be impacted by an impairment charge of $A168 million ($US135 million) on a pre-tax basis, while confirming that it would make earnings guidance before one-off items.
The news means the company is still feeling the impact of its big push in 2007 into the North American market where the recession has forced companies to slash costs.
The news left the shares up 5.6%, or 13 cents at $2.45 yesterday.
"The impairment charge is attributable to the deterioration in economic conditions and higher risk premiums specific to Transfield’s North American subsidiary USM.
" responded by implementing initiatives to improve operating efficiency and client services, ensuring USM is well positioned to respond to improvements in the US economy.
"The impairment charge will not impact the Company’s ability to pay dividends or impact debt covenants," Transfield said.
"Excluding the impairment charge, Transfield Services is expected to achieve the previously stated guidance of growth at the lower end of the 10 – 20 per cent Net Profit After Tax (pre-amortisation) range."
That would put earnings around $116 million. Assuming there were no other charges and costs, Transfield will probably book a loss of around $50 million for the 2009 year.
The company said in yesterday’s statement that its net debt position at June 30, 2009 was approximately A$390 million, down from A$584 million at 30 June 2008.
"Excluding the impact of foreign exchange rates, the reduction in net debt was A$325 million on a constant currency basis, reflecting the ongoing focus on capital management initiatives," the company said.
Transfield Services CEO, Dr Peter Goode, said in the statement: "Since joining Transfield Services in April this year, my immediate focus was on delivering the FY09 guidance with an emphasis on tighter accountability of divisional management and operational efficiency."
"It is satisfying to confirm FY09 guidance – with NPAT growth (pre amortisation) exceeding 10 per cent in the face of challenging conditions. This demonstrates the resilience of our business model."
"As the Company advised in May, opportunities in Australia and New Zealand from government stimulus packages in the Infrastructure Services and Facilities Management sectors continue to materialise. Further to this, the growth in our Emerging Markets region continues to be strong."
"Our North American businesses, including USM, are well positioned to respond to improvements in conditions. Our business in Canada continues to exceed expectations."
"We look forward to providing further details on the operating performance at the full year results announcement."
Detailed full year results will be announced on August 26.
