LONDON (Alliance News) - Redhall Group PLC said Thursday that lower volumes in its Nuclear Contracting business will lead to "significant" losses in the current year, causing the company to lower its forecasts for a third time, now expecting operational profit to broadly break even.
The specialist engineering support services group said in a trading update that following an extensive review by its new executive team, it has revised its forecasts for the full-year to September 30, 2014.
Redhall said that its Manufacturing and Engineering businesses continue to operate well and produce acceptable levels of profitability, in line with its strategy of realigning the group towards manufacturing. However, the impact of lower volumes in Redhall's Nuclear Contracting businesses will lead to significant losses for these businesses in the current year, it said.
The company said that, following the review, it now expects to broadly break even before exceptional items at the operating profit level, as it has "now recognised the full extent of issues in Nuclear Contracting and action is being taken to put the businesses on a sounder footing."
Redhall has also provided for further exceptional contract losses and restructuring costs across the group, bringing exceptional charges for the year to GBP2.7 million, "Our bankers, HSBC Bank plc, remain fully supportive of the Group," said the company.
Whilst its has experienced delays in work from its major clients, the company said it expects to deliver on its recovery plan, albeit over an extended timeframe.
Redhall did not provide any financial details regarding its new expectations, however, in June the company lowered its full-year expectations for the second time in two months as its reported its first-half results. The company posted a pretax loss of GBP1.0 million for the six months ended March 31, compared with a GBP449,000 loss a year earlier, as revenue dropped to GBP50.6 million from GBP56.4 million.
The revision came after the company warned in May that it was experiencing delays converting major opportunities into contract awards, and had said at that time that it expected its performance to be below market expectations, although not materially so.
Redhall Group trades 16% lower at 23.10 pence per share Thursday morning, amongst the top three fallers on AIM.
By Alice Attwood; aliceattwood@alliancenews.com; @AliceAtAlliance
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