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SYDNEY - Australian engineering contractor Downer EDI Ltd said today it expected full year net profit to be as much as 37 per cent lower than previously expected and added that the managing director was no longer with the company.
The profit dip was explained as being due to a higher-than-expected cost of settling disputes.
Downer, which services both government and private power, transport and resources projects, said it now expected a net profit after tax of A$101.5 ($114) million compared with its previous forecast of between A$157 million and A$160 million for fiscal 2007 compared to a A$25 million loss the previous year and market consensus estimates of A$171.433 million.
It said its underlying profit was in line with previous guidance and revenue was also expected to match the forecast 15 per cent rise to A$5.4 billion.
It said the result would be affected by the commercial settlement of disputes, higher costs and delays, and a more conservative approach to contractual issues.
The company said managing director Stephen Gillies would step down immediately.
Shares in Downer EDI plunged more than 18 per cent in early trading on the ASX today after the big profit downgrade.
Shares had been placed on a trading halt yesterday. The stock closed at A$7.01 on Tuesday.
At lunchtime today (NZT), Downer EDI shares were down A$1.31, or 18.69 per cent, at A$5.70 on a volume of 3.4 million.
- REUTERS
