Watpac flags $4m profit hit

An uncertain future for Pluton Resources’ Cockatoo Island iron ore project has led Watpac Civil & Mining to flag a hit to its net profit of between $2 million and $4 million for the 2015 financial year.

In a statement to the ASX today, Watpac said that following a review of all of its construction and mining services projects, it estimated underlying net profit after tax for the full year to be broadly in line with the $17.8 million result it achieved in the last financial year.

“No further profit contribution from the Cockatoo Island project has been assumed in deriving this estimate,” the company said in a statement.

Watpac has previously said its contract for work at Cockatoo Island was expected to contribute about $50 million to $60 million in revenue, however nearly $40 million of that work is yet to be completed.

“It was also noted that should mining services works not resume at Cockatoo Island, the company’s revenues and net profit in FY15 would be adversely affected,” Watpac said in a statement today.

“While the exact timing of the commencement of profit recognition on some recently commenced construction projects is not yet definitively known, at this time it is anticipated that the group will record an underlying net profit after tax for the half year of between $5 million and $7 million.

“This anticipated result is also based on there being no recovery reliance on any amounts currently outstanding from Pluton, and similarly there being no further profit contribution from the Cockatoo Island project.”

Pluton fell into the hands of KordaMentha as receivers earlier in the month, putting operations at Cockatoo Island on hold.

However, the troubled miner’s major shareholder, General Nice Resources, said it would commit to provide extra funding to recommence operations at the project, while KordaMentha said it was in talks with Watpac to return to work.

Watpac’s share price closed 2.56 per cent lower at 76 cents per share.