Keep a close eye today on the shares in southeast Queensland building materials group, Wagners Holding Co after it slipped out an update on it's on continuing cement supply contract dispute with the giant Boral revealing a possible $10 million hit to after-tax profit for 2018-19 and more before tax.
Shares in southern Queensland construction and transport company Wagners plunged more than 20% yesterday after informing the market last night about a dispute with Boral that could cost the company about $20 million.
The dispute with Boral ((BLD)) has now been escalated to the Queensland Supreme Court with volumes to Boral still suspended. Wagners has downgraded FY19 earnings guidance by -$10m at the midpoint to $25-28m, -20% below Credit Suisse's prior forecasts.
Wagners has cut FY19 profit guidance, down to $35-38m from a prior $39m, due to the slow start-up of some current projects and the need to upsize its business in order to be able to tender for larger projects, the broker reports.
Project delays and wet weather are a fact of life in the construction game, the broker notes, but they have put a dampener on Wagner's FY19 performance to date and led to the broker cutting earnings forecasts by -15% and -11%% in FY19-20. Confidence has been lost given FY19 was meant to be the big year in infrastructure with FY20 looking uncertain.