RCR Set To Join Lendlease With Earnings Dowgrade

By Glenn Dyer | More Articles by Glenn Dyer

More problems in the engineering and contracting sector yesterday – RCR Tomlinson shares were suspended yesterday on fears about its earnings, while shareholders again sold off Lendlease shares for a second day.

Although Monday’s losses were not as deep as those of last Friday in the weak of the shock $350 million impairment of contracts in Lendlease’s engineering and services business.

The company’s shares fell a further 6.3% on Monday to $13.49, a new two year low.

The sharemarket losses now total $2.2 billion in the past two days in the wake of the sell-off.

It was the second provision since June when it wrote-off $200 million, which the company blamed on a number of largely unspecified issues across a series of projects including the NorthConnex site in Sydney.

Meanwhile shareholders in troubled engineering contractor, RCR Tomlinson are waiting for the company to provide a new trading update by tomorrow (Wednesday) after a surprise request on Monday for a trading halt, its second in three months.

The announcement, which is believed to be related to difficult trading conditions, would have “consequences” for funding, the company said. The trading halt is expected to last until tomorrow.

RCR said in late August after a lengthy suspension while it sorted out the financial impact of two troubled contracts, that it was targeting underlying earnings before interest and taxation of between $40 million and $48 million in 2018-19, with earnings weighted to the second half of the financial year.

The company raised around $100 million to refinance its business after taking $57 million in write-downs on two Queensland solar farm projects.

It said revenues would be lower than in 2017-18 when it reported revenues of $2 billion.

The trading halt comes after RCR’s chief financial officer, Andrew Phipps, quite suddenly last Wednesday citing “personal circumstances”. Former chief executive Paul Dalgleish quit in late August in the wake of the first suspension.

RCR shares closed at 87 cents last Friday, below the issue price of $1.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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