Ausgroup

Ausgroup: Disappointing FY10 results as per profit warning. Revenue -23% yoy to A$367m, due to lower activity and client delays on certain projects. Gross margins fell, due to lower margins on projects post the global financial crisis and provision for loss on a W Australian construction project, causing net profit to collapse 89% yoy to A$2.4m. Cactus business remained dismal and was fully written off on A$4.7m impairment charge. Div of S0.64cts unchg from last yr…

Mgt guides for outlook to remain challenging into 1H11, while the Group’s fabrication and manufacturing business also expected to see headwinds due to intense competition. Pick up in tender activity only expected in 2H11 mainly from W Australia, according to project development schedules. Current order book at A$362m, provides less than one year’s visibility…

Results were way below consensus estimates. Street ratings are already negative, but target prices could be further revised downwards. Probably wise to avoid in the near term.