Diploma Group has fallen back into the red, after delays in commencing work by its construction arm significantly affected its half-year results, but it is expecting the loss of profitability to only be a short-term issue.
The construction and development firm announced its results yesterday, reporting a net loss of $1.2 million for the six months to December 31, on revenue of $47 million.
In the previous corresponding half- year, Diploma lodged a net profit of $1.2 million on revenue of $111.6 million.
The company said delays in external construction work, with $100 million in new jobs announced in FY2014, was the main reason behind the loss, however, around $60 million of that work has now commenced.
Other contributing factors included significant costs relating to the re-working of an accommodation village contract at Wickham in the north-west of the state, however Diploma said it expected to recover those costs from the contractor.
Managing director Nick Di Latte said the loss was disappointing, but with $242 million in work in-hand for its construction division and a $400 million development pipeline, he expected a profitable result in FY2016.
“With the work book ahead in both the construction and property divisions and a significantly improved cash position expected upon completion of our four internal projects, Diploma is well placed to turn this result around and return to profit in FY2016,” Mr Di Latte said in a statement to the ASX.
Diploma had been rebounding strongly from a $15.5 million net loss in FY2013, after it lodged a net profit of $4.7 million in FY2014.
The company’s development pipeline included the $160 million Chemlab redevelopment in East Perth, and an apartments site at 254-256 West Coast Highway in Scarborough.