Construction and engineering firm Seymour Whyte Limited (ASX: SWL) saw its shares slammed down 19.7% to $1.14 today after Managing Director David McAdam resigned effective yesterday.
Mr McAdam was only appointed as CEO in July 2012 – less than 3 years ago, and Seymour Whyte gave no explanation for the resignation – hence the share price fall. Investors don't like nasty sudden surprises like this.
Seymour Whyte says while it conducts a recruitment process, Gary Georgiou, GM Constructions will continue to run the Constructions business and Rob Carr, CEO of Rob Carr Pty Ltd, Seymour's civil construction and tunnelling business, will continue to run that.
The company recently reported a 34.8% fall in half-year net profit for the six months to December 2014, to $3.2 million, but is expecting to have a much better second half, forecasting net profit of between $8 million to $11 million. That suggests the second half should see nearly double the first half's results.
That should come on the back of Seymour Whyte securing $355 million of new contracts in the last half year and an order book of $450 million. The company says it has also identified $13.6 billion in potential tender opportunities between this year and the 2019 financial year.
Still, it's yet another disappointing blow to Australia's construction industry. We've already seen several mining services companies, engineering and construction companies hammered through writedowns, huge losses, deferred and lost contracts as mining investment continues to fall. Macmahon Holdings Limited (ASX: MAH), Ausdrill Limited (ASX: ASL) and Monadelphous Group Limited (ASX: MND) have all suffered so far. The problem for companies like Seymour Whyte is that as resource investment dries up, more and more companies servicing that space will be looking for work in sectors such as for utilities and infrastructure – right where Seymour Whyte plays.
