It was already a bad day on the stockmarket, but UGL Limited's (ASX: UGL) announcement of a $236.4 million loss for its 2015 financial year this morning hasn't helped its share price.
In the year ended 30 June 2015, UGL swung to the steep loss, from a $62.1 million profit a year earlier, thanks to some provisions, impairments and one-off charges.
Indeed, revenue from continuing operations jumped to $2.01 billion, from $1.82 billion in 2014, and cash flow from operations came in at roughly $65 million, up from $62 million.
"FY15 was a critical year for UGL to ensure we took the necessary steps to reposition the business for its future," UGL CEO, Ross Taylor, said.
The company's board refrained from declaring a dividend, and said their future reinstatement will only be considered when underlying earnings have "normalised and it is considered appropriate in the context of UGL's capital requirements and outlook."
Despite the downturn in the resources sector, Mr Taylor expects revenue in the 2016 financial year to be in line with FY15 and is confident the group can deliver improved profitability. He said the group's EBIT margin is expected to return to 3%.
Looking further ahead, in FY17 the group is expected to enjoy a step change in revenue thanks to its exposure to transport infrastructure and LNG maintenance.
"Beyond FY17, we will continue to build on the momentum we have created through FY16 and FY17. I also believe we will be strongly positioned as an industry leader to deliver significant growth in new and adjacent market opportunities," Mr Taylor said.
Should you buy UGL shares?
The market for UGL is undoubtedly challenging. And, although the group appears to be giving it their best shot, I suggest Foolish investors remain patient and avoid buying mining services companies at this time. Indeed, there could be more pain to come for holders of all resource-related companies (especially services businesses) in the short term.
