Expect a bad day Friday maybe a bounce and then further falls i surmise!!!!
ANALYSTS are expected to downgrade earnings per share expectations for Transfield Services by more than 20 per cent today after the group revealed a weaker than expected forecast. TRANSFIELD Services shocked the market with an outlook for full-year 2012 that was far weaker than expected, sending its shares down by more than 31 per cent today. The civil works and engineering services company said it was expecting 5 per cent growth in net profit for full-year 2012 on a pre-amortisation basis, which would equate to a range of between $130 million and $135m.
But that was substantially below market expectations of between $150m and $180m and the disappointment sent the group's shares crashing by as much as 30 per cent in early trade.
The shares recovered in the afternoon but still closed 22.3 per cent down at $2.30.
"What you're going to see is across-the-board downgrades because the market was just not anticipating a deterioration in the second half for the Australian and NZ businesses that will carry through into full-year 2013," an analyst said.
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For the year to June 30, Transfield met market expectations for a pre-significant item net profit of $100m, up from $96m.
But a series of non-recurring expenses, including a foreign exchange hit of $50m on the sale of the group's USM business, and writedowns associated with the divestment of its stake in its eponymous infrastructure fund, totalled $119.9m.
This meant Transfield actually reported a net loss of $19.7m for full-year 2011.
Transfield sold its North American maintenance business USM for $255m and also realised $93m from the divestment of its stake in the Transfield Infrastructure Fund to a Thai company.
Chief executive Peter Goode said the funds from the sale of those assets would be invested into organic growth options, rather than major acquisitions.
"The primary focus will be around organic growth opportunities," Mr Goode said.
"We will be looking for small skilled or technology gap acquisitions that support our strategy or some larger ones that will recover short-term earnings gap from the sale of USM and (Transfield Infrastructure Fund), but at this stage we don't expect to do an acquisition where we will need to come back to market and raise more capital."
Much of the growth in Transfield is expected to come from the $575m acquisition of oil-rig services group Easternwell, but bad weather has affected earnings from that business.
Easternwell is expected to reap $70m in underlying earnings for full-year 2012, but Mr Goode said some work would be deferred to the 2013 financial year. The company declared a 9c final dividend.
TSE Price at posting:
$2.30 Sentiment: Sell Disclosure: Not Held
