The contractor said it now expected pro-forma earnings before interest, tax, depreciation and amortisation to come in at a loss of $A20-25 million for the period ending in June, 2014.
Previous guidance for the fiscal year predicted pro-forma earnings of $45-50 million.
The company largely attributed the revision to a challenging year for the broader engineering and construction sectors, with increased competition and slowing activity in the domestic market.
It also noted the negative profit impact of efforts to focus on immediate cashflow generation.
Two contracts being undertaken by the company’s Pilbara logistics joint venture were declared unprofitable due to cost pressures.
The reset guidance follows a $23-28 million profit write-down announced by the contractor earlier this month, which in turn followed a $127 million write-down announced in November.
These downgrades tied to the poor performance of the Diamantina power station in Queensland and the West Angelas power station in Western Australia brought Forge’s total profit write-down for the fiscal year to $150-155 million.
The power stations were acquired as part of Forge’s CTEC acquisition in January 2012 and have been a driving factor in the company’s economic difficulties and share volatility in recent months.
Forge said today that its immediate priority was to close out current projects in the power sector.
This is expected to result in less emphasis on booking new major projects and a short-term impact on earnings.
“The management team is very focused on completing the Diamantina power station and West Angelas power station projects as quickly as possible so the company is better positioned for a stronger performance in FY2015,” Forge chief executive and managing director David Simpson said.
The company emphasised recent progress including new asset management projects expected to be secured shortly in North America and $25 million of asset management works secured in WA in the past week.
The company’s total value of new asset management works secured in fiscal 2014 comes to about $115 million.
This momentum coincides with the appointment of financial services company Euroz Securities as corporate advisor to formally manage a number of approaches made by various third parties.
“Forge Group is encouraged by the interest shown in the company by third parties despite recent challenges,” Simpson said.
“This level of interest reflects the strength of the underlying business, which is supported by an order book of $1.5 billion and $1.3 billion active tenders as at January 2014.”
A $1.5 billion contract shared with a Spanish partner at the Roy Hill iron ore project in WA is worth about $830 million for Forge.
Forge recently confirmed it would proceed with phase 3 works at the project, which was expected to be fully completed by September 2015.
It said it was still fully backed by ANZ Bank, and indicated that it would soon pursue to renew its 15% annual placement capacity. If approved by shareholders, it will provide flexibility to issue equity securities without prior shareholder approval.
