SRG lowers full-year guidance

SRG Global has reported solid half-year results but its shares fell sharply after it lowered its full-year guidance on the back of project delays.

The company delivered revenue of $238.5 million, up 49.5 per cent from the prior corresponding period, while earnings before interest and tax depreciation and amortisation increased by 20.5 per cent to reach $16.4 million.

In June, local contractors Global Construction Services and SRG announced a merger to form SRG Global, with an estimated value of $332 million.

The merger was completed during the first half of the 2019 financial year.

The first-half financial results included a six-month contribution from SRG and a four-month contribution from GCS Limited.

The company said revenue and its earnings before Ebitda increased from the previous corresponding period due to the acquisitions of TBS in New Zealand in March 2018 by SRG, and the remaining 49 per cent of Gallery Facades not already owned by GCS being acquired in June 2018.

It said the half-year results were in line with guidance and declared an interim dividend of 1 cent per share.

However, the company lowered its guidance for the full year, with underlying earnings before tax and interested expected to be between $22 million and $27 million.

At its annual general meeting, it had previously forecasted an Ebit of between $30 million and $35 million.

SRG Global managing director David Macgeorge said the revised guidance for this financial year was primarily a result of further delays of project awards at large-scale construction projects.

“These delays will result in the business continuing to carry significant operational-related costs in the second half without any corresponding revenue, which is fundamentally a timing issue in one part of the business,” he said.

Shares in the company were down 12.65 per cent to trade at 38 cents each at 1pm AEDT.