Contractor VDM Group has warned of an expected second-half pre-tax loss of $5 million because of a loss-making project.
The company said it had budgeted for a $4.8 million hit to its bottom line because the estimated cost to complete one specific project had increased, with the rise not being able to be passed on to the client.
"As a result, the company expects earnings from continuing operations before tax in the second half to be a loss of approximately $5 million," VDM said in a statement.
VDM Group managing director Andrew Broad said the result was disappointing for the management team and employees and did not represent the significant progress made over the past year to turnaround the business.
"While it is not a legacy project - and we are taking full responsibility for this outcome - the project was tendered during the very early stages of our transformation program, at a time when a number of key management personnel changes had yet to be made and a significant amount of management's energy was devoted to recapitalisation and asset divestments," he said.
"Since that point in time, the company has implemented improvements to its internal management systems that are intended to improve controls and information flows across project tendering and execution."
VDM said its broader program of transformation and turnaround was continuing.
Mr Broad said the new business strategy adopted as part of the transformation strategy was leading to an improvement in the underlying performance of the business.
"Our revenue continues to grow each quarter and we are expecting revenue from our continuing operations in the second half to be approximately 10 per cent higher than the first half of the 2012 financial year," Mr Broad said.
"We have seen a sustainable improvement in underlying profit before tax and EBITDA during the third and fourth quarters of this financial year, both of which are a substantial improvement on the underlying result delivered in the first half."VDM shares were off 0.2 cents, or 4 per cent, to 4.8 cents at 9.20am.