It would appear as though a lot can change in a couple of months over at staffing, maintenance, and facility management services provider Programmed Maintenance Services Limited (ASX: PRG).
At the end of July its shares went on a tear after management provided a positive outlook for FY 2017.
But unfortunately just two months down the line Programmed has released an update to the market which reveals that it has downgraded its FY 2017 EBITDA forecast from $120 million to $100 million, excluding one-off Skilled Group integration and restructuring costs.
Management has advised that the short term revenue growth of its staffing business will not offset the steep decline in the marine business as it previously expected.
Its Programmed Skilled Workforce segment's on-hire headcount in July and August fell 6.7% compared to June, with a reduction in demand being seen across all major states. Management believes its customers have started the new financial year by lowering costs and reducing capital expenditures.
Positively though the segment does have more than $300 million per annum of new and near-term revenue opportunities in its development pipeline. If it can win this work then it certainly would go some way to supporting growth, but at this point in time I have little confidence in the company doing so.
Much like BHP Billiton Limited (ASX: BHP) and Santos Ltd (ASX: STO), Programmed may see a benefit from a rise in oil prices if OPEC does cut its production. For example revenue in its offshore marine business has dropped 80% in the last two years, partly as a result of the drop in oil prices, but this could change if oil prices surge higher.
But whether or not a cut in oil production by OPEC will have a lasting effect on prices is of course a matter of fierce debate.
Personally, at this point in time I believe Programmed shares are best avoided. The revision of its earnings guidance just two months after its annual general meeting does not fill me with any confidence.
Clearly I'm not alone in this view. Investors have been heading for the exits en masse this morning, dragging its shares lower by a whopping 19% in morning trade.
