Infrastructure and environmental services group Cardno (CDD) joined the lengthening list of mining and related services companies in downgrading their guidance and revealing write downs.
As a result the company’s shares suffered the biggest loss on the ASX yesterday, plunging 27.3% at $2.50 after announcing a $200 million asset impairment, which was blamed on its disappointing performance in Australia and the Americas.
That fall topped the 25% plunge last November when the company downgraded its first half profit estimate.
Cardno said yesterday it was expecting to post a net profit after tax of $48 to $51 million for the 2015 financial year after the “under performance” of its business in the Americas and "continued challenges" in the Australian market.
This would be sharply under the group’s net profit of $78.13 million net profit for the 2013-14 year.
The group said the soft conditions had seen the company cut its second half profit forecast to a range of between $16.5 and $19.5million. That was after first half profit fell 27% to $31.5 million.
CDD 1Y – Cardno slumps again on new $200m writedown
Cardno acting chief executive Graham Yerbury said yesterday the harsh winter in the north-east of the US, along with a slowdown in demand for oil and gas services around the globe had led to the weaker results in the latter half of the financial year.
The under performance of the operations in the Americas has "prompted a reassessment" of the group’s investment in the US and Ecuador.
"As a result, Cardno will take a non-cash impairment charge expected to be in the order of $200m in recognition of the diminution in the value of this business," the group said. Details of the writedown will be provided in the full-year results on August 18.
Mr Yerbury said the ongoing slowdown in Australian mining, oil and gas sectors was compounded by a lower than expected recovery in infrastructure investment, while the recent volatility in the Australian-US dollar exchange rate was also hampering business.
“The past twelve months have been very challenging with the difficult market conditions requiring significant action to improve overall business performance and outlook,” Mr Yerbury said.
“While it is difficult to pick the bottom of the market, we believe that the outlook for our Australian business in the coming financial year is broadly positive.”
Cardno joins WorleyParsons in warning of a sharply lowered full year profit for 2014-15 because of the sluggish nature of global oil and gas and mining sectors.
Earlier this month WorleyParsons revealed a total of $125 million in write downs and impairments and other losses. It also warned of a 50% drop in second half profit and said it would cut 2,000 jobs.
These results won’t be the last from the mining and energy sectors.
