Coote Industrial has downgraded its earnings forecast by about $10 million on the back of uncertainty surrounding the resources super profit tax and the proportional takeover bid by Elph.
It's the second profit warning from Coote, which last month warned that its full-year earnings could be impacted by the increased charges associated with the extension of its banking facilities and costs related to Elph's takeover bid.
Coote today said since then it had experienced a deterioration in general trading conditions and delays in the finalisation and start of new contracts in the wake of the federal government's proposed resources super profit tax, which will impact its clients.
The company added that general weakness in investment markets on the back of European sovereign risk concerns had also contributed to an overall softening of demand.
"The board is now expecting underlying EBITDA for the full year to be in the range of $25m to $28m, before minority interests, and allowance for the impact of the proposed sale of South Spur Rail Services or the costs of responding to the Offer," Coote said.
"The major portion of the reduction in expected EBITDA will be represented by revenue deferral and should therefore be recouped in subsequent periods.
"While the change in expectations for the current year is disappointing, the Board continues to believe in the longer term potential of the business and accordingly maintains its recommendation that shareholders reject the Elph Offer."
Coote in November had forecast full year earnings before interest, tax, depreciation and amortisation of $39 million.
Coote is currently fighting a proportional takeover bid by Elph, which is owned by Victorian and Tasmanian Caterpillar dealer Dale Elphinstone.
The offer of 26 cents cash for share is for a capped 35 per cent interest in Coote. The offer was today extended to May 26.
Elph currently holds a 27.35 per cent interest in Coote.
Shares in Coote were down one cent to 24.5 cents at 12:21 AEST.
