Engineering contractor group Cardno Limited (ASX: CDD) has been the market's biggest casualty today with its shares diving as low as $2.48, representing a loss of 27.9%, following a profit warning. The shares haven't traded that low in more than a decade.
So What: The company said that it is now expecting net profit after tax (NPAT) for the second half to be between $16.5 million and $19.5 million due to the "under performance of our businesses in the Americas and continued challenges in the Australian market." Full-year NPAT is now tipped to fall between $48 million and $51 million, which compares to the $78.1 million profit achieved in the 2014 financial year.
To make matters worse, Cardno has also flagged a $200 million write-down on its US and Ecuadorian investments due to harsh winter weather in the north-eastern states, a slowdown in the demand for oil and gas services globally, together with a slower than anticipated conversion of backlog into project starts.
Commenting on the development, acting CEO Graham Yerbury said: "The past twelve months have been very challenging with the difficult market conditions requiring significant action to improve overall business performance and outlook." Yerbury remained more optimistic about its Australian business, stating that the company was well positioned to take advantage of any improvement in the economy.
Now What: It's been a tough year for shareholders of Cardno Limited, who have watched the shares slump nearly 65% since early September. The stock, together with the market's confidence, has taken a beating due to poor earnings results, the sudden departure of CEO Michael Renshaw after just 10 months in the job and tough market conditions.
While some investors might view Cardno as a potential turnaround opportunity, or otherwise a possible takeover target, the company certainly looks like one for 'Foolish' investors to avoid…
A MUCH better bet than Cardno Limited
