GCS shares slump on earnings update

Shares in Global Construction Services have fallen to a one-year low, on the same day the company’s shareholders voted to change its name to that of merger partner SRG Global.

The company said today its underlying earnings before interest and tax (EBIT) would be in a range of $30 million to $35 million for the year to June 2019.

The earnings would be weighted to the second half of the financial year due to delayed timing of project awards.

By comparison, SRG and GCS posted a combined EBIT of $31.1 million for the year to June 2018.

That was after adjusting for restructuring costs ($2.4 million) and merger costs ($1.9 million) and a $2.1 million one-off gain.

The company’s share price fell by 12 per cent to 47.5 cents today.

That compares to a peak of 94 cents at the end of 2017.

The scrip merger between GCS and SRG was announced on June 12, when GCS shares were trading at 73 cents.

The company said today it had work in hand of $560 million and preferred status on about $200 million of contracts.

It predicted a step change in profit growth in FY20.