01/04/2014 - 11:59

SCEE slumps on profit downgrade

01/04/2014 - 11:59

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Southern Cross Electrical Engineering has forecast a big fall in net profit for the 2014 financial year, with intense competition for contracts squeezing its margins.

SCEE slumps on profit downgrade
SCEE managing director Simon High speaking at the company's new office opening in November last year.

Southern Cross Electrical Engineering has forecast a big fall in net profit for the 2014 financial year, with intense competition for contracts squeezing its margins.

The company expects its full-year net profit to be between $7 million and $10 million, compared to the record $17.3 million net profit it recorded in FY13.

Its revenue is forecast to drop from $278 million in FY13 to between $235 million and $255 million in FY14.

The anticipated results represent a decrease from current consensus forecasts, the company said.

SCEE said opportunities in the iron ore and liquefied natural gas sectors were no longer expected to come online in time to bolster the company's FY14 results.

With competition for contracts increasingly tight, the company's gross margins have fallen from 23.5 per cent in the first half of FY14 to an anticipated low of 15 per cent in the second half of the financial year.

SCEE managing director Simon High said the company was under undeniable margin pressure and would continue to target improvements to counter this.

"While it is disappointing that we have had to revise our full-year forecasts, it is important to note that this is in large part due to the expected timing of secured and anticipated work," he said.

"As an electrical and instrumentation contractor operating towards the end of the construction cycle, we are particularly susceptible to these scheduling changes."

Mr High said the company would continue to search out new areas of business, while considering partnering opportunities to boost its margins.

SCEE shares slumped 17 cents lower to 57 cents at 11:53am WST.

The company's share price has more than halved in the space of six months, having traded at about $1.20 in October last year.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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