After setting guidance earlier this year for a $A3-6 million net profit after tax in fiscal 2014, Sedgman says it will now record a net loss after tax in the range of $5-7 million.
The likely result has been attributed to the company’s need to providen for excess leased office space that is now under-used as well as slippage of key surplus asset sales.
Sedgman also flagged challenging market conditions in the coal sector, resulting in large-scale capital expenditure being deferred by most major mining companies.
“While some activity exists in small-scale asset optimisation or critical operational upgrades, the next 12-18 months will continue to be subdued,” the company said.
“Overheads remain under review and will be adjusted as required while retaining core competencies and capabilities for when market conditions improve.”
The guidance update coincides with the awarding of a $134 million engineering, procurement and construction contract under the Guyana-Sedgman joint venture (JGSJV), established with South American constructor Grana y Montero (GyM).
Sedgman chief executive and managing director Nick Jukes said work at Guyana’s Aurora represented a significant contract win given thet market conditions.
“I am excited by the opportunity to expand the relationship with Guyana Goldfields that has grown over recent months,” he said.
“This is the first major project to be delivered via the GSJV which combines Sedgman’s robust process knowledge and operational experience with GyM’s local construction knowledge.”
The scope of the contract includes a 1.7 million tonnes per annum processing plant, power station and integration management.
Last February, Sedgman recorded a net loss after tax of $6.7 million for the half year to December compared to a $12.3 million after-tax profit at the same time in the previous year.
The company, however, pointed to the Aurora contract win as well as and EPC contract for the Visa project in Canada as positive signs that the company was continuing to position itself for improving market conditions in the medium term.
And operations contract with Macarthur River is expected to terminate a month earlier than expected, but this is not projected to have a material impact on fiscal 2014 results.
Shares in Sedgman were last trading 3.3% lower at 44c.
