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AU Watpac shares punished by profit downgrade

Property Here - Thursday, May 23, 2013

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SHARES in Watpac slumped 26 per cent late yesterday after the Brisbane-based property group downgraded its profit forecast for the current financial year.

Watpac expects full year underlying net profit in the range of $3 million to $9 million, a sharp slide from the $15.3 million result it posted in the 2011-12 financial year.

Directors have also scrapped any full-year dividend payment.

They said the downgrade was primarily a result of "execution issues'' in Watpac's civil operations division in Queensland and Victoria and the expected costs associated with the consolidation of these operations.

"Although the financial impacts associated with the consolidation exercise are disappointing, the directors believe the decision to restructure the group's operations in this manner is critical to the future profitability and long-term health of Watpac, and will ultimately deliver enhanced value to shareholders,'' the company said in a statement.

The market responded swiftly, sending Watpac shares 19 lower to 55.

Watpac said its statutory full-year result would likely range from a $5 million loss to a $1 million after-tax profit, allowing for expected property impairments of $8 million after tax.

Former chairman Kevin Seymour sold his 15 per cent stake in Watpac last month at 70 a share to the Besix Group.

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