Australia: Clough Lowers Earnings Guidance

Australian engineering company Clough Limited announced today that it anticipates underlying earnings for the half year ending December 2011 will be down on expectations, however underlying earnings for the full year are expected to be higher than the previous year.

H1 2011-12 Guidance

H1 financials from continuing underlying operations:

• Total revenue is expected to be in line with the previous corresponding period
• Underlying earnings from operations is expected to be around $22m
• Underlying NPAT is expected to be around $19m.

The primary reasons for the expected lower half year results are:

• Cost overruns on a fixed price contract for the upgrade of three gas regulating stations in NSW, resulting in a loss of up to $3 million
• A margin reduction for two EPC contracts as a result of increased contract values without a commensurate increase in fee. The fee structure for these contracts is the subject of ongoing discussions with the clients.

Clough will finish the half year with a strong balance sheet following the planned completion of the Marine Construction sale by the end of December 2011.

Clough expects that the issues which have impacted the business in the half year should be resolved during the second half of 2011-12, which, together with an increased contribution from new and existing contracts, should result in stronger performance in H2 2011-12.

Clough’s longer term outlook remains positive as it continues to win new work and the level of tendering activity remains high with a number of significant near term opportunities in the pipeline.

[mappress]
LNG World News Staff, December 5, 2011; Image: Clough