The Gentrack Group Ltd (ASX: GTK) share price could come under pressure on Thursday following the release of a guidance update this morning.
At the time of writing the New Zealand-listed shares of the leading provider of software solutions for utilities and airports are down 4%.
What was in Gentrack's update?
This morning Gentrack revealed that it would be revising its full year earnings before interest, tax, depreciation and amortisation (EBITDA) guidance down following a tough start to the second half.
According to the release, the company now expects its EBITDA for the 12 months to September 30 to be within a range of NZ$27 million to NZ$28 million. This compares to its previous guidance of EBITDA marginally ahead of its FY 2018 result.
Last year Gentrack generated EBITDA of NZ$31 million, which means this year its operating earnings will be down 9.7% to 12.9% year on year.
Why is Gentrack downgrading its guidance?
The company appears to have been negatively impacted by Brexit.
Management explained that the downgraded was "due to delays in customer projects and contracts, and bad debt risks in the UK. The delays relate primarily to customer resourcing and do not indicate that the projects concerned are at risk."
This was a risk that the company brought up with its half year results earlier this year. At the time it said: "We continue to see cautious investment behaviour by UK utilities as a result of Brexit, energy price regulation, and fewer new entrant energy retailers."
One positive, though, is that management remains optimistic on its long-term growth prospects.
It advised: "We note the ongoing dependency on the timing of key contracts and project milestones and confirm that there is a strong pipeline of opportunities in our utilities and airports markets which support our long-term growth objective."
Elsewhere on the market today, investors will be watching Fortescue Metals Group Limited (ASX: FMG) and Newcrest Mining Limited (ASX: NCM) shares very closely. Both are scheduled to release full year updates this morning.
