Alesco pins the blame for slide on soft trading
Sydney Morning Herald
Thursday December 10, 2009
ALESCO has warned that pre-tax earnings will slump by 29 per cent to just $30 million in the first half, blaming continued softness in the housing construction market.The profit downgrade comes just three months after the industrial brand company told shareholders trading conditions had been subdued in the first quarter.Shares in the company behind B&D roller doors slumped almost 9 per cent, or 43c, to a two-month low of $4.49 yesterday. However, the stock is still well above its two-decade low of 60c in March, when investors were concerned two of Alesco's overseas lenders - HSBC and BNP Paribas - would not renew $150 million of credit facilities.Alesco said earnings per share for the full year would be between 34c and 36c, well down on the market's expectations of 44.5c. Three-fifths of its business are exposed to the housing construction and renovation markets. The chief executive, Justin Ryan, said all divisions had felt the full impact of the global crisis. Sales had fallen due to soft housing markets in Australian and New Zealand.He warned the company's performance this financial year would hinge on the timing and pace of recovery in the new housing and renovations markets, as well as the impact of government stimulus."Activity levels in the broader construction and infrastructure markets remain subdued, with a significant decline in new private sector projects," he said.The government stimulus would provide a buffer against the decline in activity but, Mr Ryan said, the benefits of the spending were not expected until late next year.Its businesses range from earthmoving tyres, water pumps and roller doors to kitchen fixtures and range hoods.A Foresight Capital analyst, Todd Guyott, said the downgrade was a reflection of the housing market's slow recovery. "They need the cycle to turn their way, which it clearly hasn't. It's well positioned for a recovery - it's just not going to be this year," he said.Revenue from the company's continuing operations fell by 15 per cent in the first half. Alesco said margins were adversely affected by lower volumes, pricing pressures and the strength of the Australian dollar against the greenback and euro.
© 2009 Sydney Morning Herald
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