31/01/2017 - 14:01

Decmil scales back forecasts

31/01/2017 - 14:01

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Decmil Group has substantially cut its revenue forecasts for the current financial year due to delays in recent contract wins, while suffering further losses at a Victorian construction project.

Decmil scales back forecasts
Scott Criddle says opportunities are opening up in some sectors, following challenges in the 2015 and 2016 calendar years. Photo: Attila Csaszar

Decmil Group has substantially cut its revenue forecasts for the current financial year due to delays in recent contract wins, while suffering further losses at a Victorian construction project.

The Osborne Park-based contractor said today it expected to incur a project loss of $6.5 million on the Hastings fuel terminal project in Victoria for the half year to December 2016.

That would be on top of an $8 million loss on the project for the year to June 2016.

The design and construct contract was valued at $27.3 million when it was won by Decmil in May 2015.

The company blamed industrial relations, weather and productivity issues for timing delays and cost increases on the project, which was 93 per cent complete at the end of December.

Decmil also said today it expected group revenue to be between $325 million and $350 million in the financial year to June 2017.

That’s a big reduction from last November, when managing director Scott Criddle told shareholders at the company’s annual meeting that FY17 revenue would be more than $400 million.

The company said some revenue previously due to be booked in FY17 would be deferred to FY18.

It said work in hand and visible revenue for FY18 currently stood at $160 million.

In addition, the group is either a preferred or shortlisted tenderer on new construction projects totalling $150 million.

These include renewable energy, resource sector, commercial building and infrastructure projects.

Mr Criddle said today the 2015 and 2016 calendar years had been challenging for the construction and engineering sector in Western Australia, particularly in the resources sector.

“Market conditions have started to improve in some of the group’s core sectors and opportunities are arising in new sectors, resulting in some positive recent contract wins and an improved outlook for FY18 and beyond,” Mr Criddle said in a statement.

Recent wins announced by Decmil include a $50 million contract with Rio Tinto for a bauxite project in Queensland and a $40 million contract on Rio Tinto’s Silvergrass iron ore project.

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