Lycopodium slumps on profit warning
Lycopodium slumps on profit warning

UPDATE 1.20pm: Engineering and project management consultant Lycopodium is the latest company in the mining services space to issue a warning about future earnings and experience a corresponding slump in share price.

Lycopodium said in a statement ahead of its annual general meeting today that it expected its full-year results to be in line with 2012, breaking its recent run of record revenue and profits.

More pointedly, the company warned that revenue in the 2012/14 year would fall to between $180 million and $200 million, from last year's record of $232 million.

Last year's revenue of $232 million delivered an after tax profit of $22 million, which was up 31 per cent on the 2011 result.

Lycopodium said it had witnessed a progressive change in market conditions over the past six months.

"As a board, we normally limit financial guidance to the current financial year where we have reasonable visibility," Lycopodium said in a statement.

"However, with the changing market conditions, we believe there is a need to inform shareholders of our views for 2013/14.

"On the pessimistic side the recent deferral of projects by the major miners, the progressive completion of the iron ore expansion in the Pilbara and the challenging market conditions for junior miners has removed a base load of work in Perth and will, we believe, increase competition in the sector."

Lycopodium also noted three big projects on its books were due for completion next year.

However the company said it was witnessing the emergence of opportunities in brownfield optimisation and expansion studies and would expect a number of them to progress into implementation over time.

Lycopodium shares slumped 77 cents, or 12.69 per cent, to close at $5.30 after falling as low as $5.04 in earlier trade.

The West Australian

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