Barely a month into his new role as Cape chief executive, Joe Oatley shocked the market by announcing a profit warning following a sharp deterioration in trading in Australia and the Far East and Pacific Region. The energy support services provider said revenue in the Far East and Pacific Rim would be below last year and profit margins would halve on sluggish sales and rising prices, prompting a restructure of the business there. Investor confidence is shot after this second profit warning in a little over two months.
Analysts at Canaccord Genuity said Cape had experienced deferrals on gas projects in Australia adding: "More worringly, Cape [is] not winning packages of work it had expected to win." Canaccord downgraded forecasts for full-year adjusted pre-tax profits by 30 per cent to £42.1m, giving EPS of 25.3p, and slashed next year's adjusted pre-tax profits estimates from £88.8m, to £62.3m, giving EPS of 38.3p. They expect the dividend to remain flat.
In late May Cape took a £14m hit on an Algerian project just weeks after management had said trading was in line with expectations and that the board was confident the group was well positioned for the remainder of the year. Previous chief executive Martin May left abruptly in late March.
