Cape Plc, a supplier of fire protection, scaffolding and cleaners to energy companies, slumped to the lowest in almost three years in London trading after saying its business in Australia deteriorated.
The Singapore-based company fell 35 percent to 187 pence, the lowest since September 2009. Cape said today the performance in Australia will be “well below” its expectations, with revenue and margins falling and delays to projects.
The slump will stop the company from meeting its goals for the year and will probably continue into 2013, it said. Chief Executive Officer Joe Oatley joined the company on June 29, a month after the company took a 14 million-pound ($22 million) charge from the Arzew liquefied natural-gas project in Algeria.
The downgrade in outlook for Australia is “a disappointing outcome given what appears to be a significant market for Cape’s services,” James Thompson, an analyst at JPMorgan Cazenove, wrote in a note for investors. “Our overweight recommendation is heavily dictated by our assumption that this profit warning is accurate enough to make it the last one for Cape.”
The U.K. business “continues to trade strongly” on long-term maintenance contracts, while the Middle East shows “good growth albeit at lower margins,” Cape said. The Algerian charge in May remains sufficient to cover the losses on the project.