15th Nov 2013 09:53
LONDON (Alliance News) - Cape PLC Friday said that it expects its full-year operating profit to be lower than previous expectations, due to "operational challenges" on a project in the Middle East.
The provider of support services to the energy and mineral resources sector said that while overall revenues were slightly ahead of expectations in the third quarter, they were offset by lower-than-expected profit margins on project work in the Middle East, as well as a less favourable mix of activity in the UK.
Cape said it expects operating profit for the year ending December 31 to be "materially below" previous expectations. Group earnings per share are expected to be only slightly below previous expectations, though, due to the mitigating effect from its minority interest in the Qatar business and an improvement in its overall tax rate, Cape said.
The group said that competitive pressures, combined with operational difficulties on a project in Qatar, which it didn't name, will have a knock-on effect for the region's performance in the second half of the year.
It said that its UK business is trading in line with expectations, although higher revenues were offset by a slightly lower margins.
Volumes in Kazakhstan declined as expected, as major project work in the region, including the Kashagan development project, are nearing completion, Cape said.
The group said that market conditions continue to be challenging in both Asia and Australia, although the business delivered a better-than-expected performance in the third quarter, as the company's improvement plan for its Australian business began to bear fruit.
As its Australian business outlook improves, it said that its expects the region will breakeven by the end of the current financial year and return to profitability in the fiscal year 2014.
Cape said that it has targeted a number of key prospects to be secured during the next two quarters, which will help it meet its expectations for 2014.
On Friday, Cape announced a GBP45 million scaffolding contract win with US engineering construction giant Bechtel Group Inc., in Western Australia. The contract is for the Chevron-operated Wheatstone Project, which is one of Australia's largest resource projects.
Cape said its order book as at September 30 stood at GBP482 million, down from GBP593 million at the end of June, due to the expected timing of key target contracts and challenging conditions in a number of its key markets.
The group said it will announce is results for the year on March 18, 2014.
Cape shares were down 8.7% Friday morning at 261.00 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
Copyright © 2013 Alliance News Limited. All Rights Reserved.
Related Shares:
CIU.L