Construction and contracting group VDM has told its shareholders to brace for a second half loss of $5 million, after the company took a $4.8 million hit on one of its projects.
VDM said today that the estimated costs to complete the project had increased and the funds were not recoverable from the client.
Managing director Andrew Broad said the result was disappointing and was not reflective of the progress made in the company's turnaround efforts.
“While it is not a legacy project – and we are taking full responsibility for this outcome – the project was tendered during the very early stages of our transformation program, at a time when a number of key management personnel changes had yet to be made and a significant amount of management's energy was devoted to recapitalisation and asset divestments,” Mr Broad said in a statement.
“Since that point in time, the company has implemented improvements to its internal management systems that are intended to improve controls and information flows across project tendering and execution.”
Mr Broad also said the company's restructuring was beginning to show results, with VDM expecting a 10 per cent increase in revenue in the second half of this financial year.
VDM had forecast a full-year profit after a disappointing first half loss of $31.7 million.
It also booked a $2.9 million hit on the sale of its Cape Crushing and Earthmoving Services subsidiary earlier this month.
VDM shares closed down 2 per cent on the ASX today, trading at 4.9 cents.
