Multiplex issues another profit warning, Wembley project on schedule |
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Tue, 20 Dec 2005 02:05
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SYDNEY: Australian construction firm Multiplex Group Ltd. said rising losses it is incurring in the A$1.2 billion Wembley stadium project will impact its net profit for the fiscal to the extent of A$ 165 million. It said the cost overruns, including steel cost risk, at Wembley will cut its earnings from an earlier estimate of A$215 million.
The company described this as a preliminary estimate, and there could be material changes, following negotiations on the project. It said its target for the project's completion continues to be May 2006 FA Cup final, while it hopes to hand over parts of the completed stadium starting January 2006.
In an earlier statement, the company had confirmed that the completion remains on target to permit the finals to be held at the stadium. It also talked about increasing losses at the project but did not specify the extent of the losses.
In a later statement, it said the actual loss will depend on steel costs, preliminary and acceleration costs, final talks on subcontractor claims and finalization of recoveries, including final settlement of variations with the client.
Multiplex chief executive Andrew Roberts had earlier mentioned that steel costs for the project could increase by A$60 million.
The company announced that is has sold part of its interests and rights in the Stratford project in Britain and Global Switch for about A$300 million. It had a 25 per cent interest in the residential and retail development at Stratford International Channel Tunnel rail terminal. It will, however, retain its rights to participate in the development and construction opportunities in the project. But the Global Switch project, which is related to data warehousing centres, does not come under its normal operations.
The company had issued three profit warnings from February to August and with the latest announcement, its shares fell by 12 per cent at one stage, but closing 8.4 per cent lower at A$3.16. The stock has fallen 42 per cent so far this calendar year.
The construction work of the 90,000-seat Wembley stadium near London, considered most expensive in the world, has been affected by increasing steel prices and the company's disputes with its contractors. The company said the steel bill itself could be around 25 million pounds. The most attractive part of the stadium is a 133-metre steel arch that tops the stadium and which can be seen across London.
In May, the company's founder John Roberts had quit and his family, which controls the business, covered A$50 million of losses.
Meanwhile, the company had won an A$389 million contract to build an 86-storey apartment and office tower in Dubai and a 100 million-pound residential complex in London's Elephant & Castle district.
The company is under probe by the Australian Securities & Investments Commission since May.
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Wembley project burns a hole in Australian company Multiplex's pockets 