McGrath slashes profit guidance

MCGRATH Limited’s new chief executive is drawing a line under a series of profit warnings and boardroom churn, halving the company’s full year earnings guidance in a new trading update.

The embattled property group expects to generate underlying full-year earnings of between $5 million and $5.5 million, down from between $10.6 million and $11.6 million announced in January when former chief executive Cameron Judson, chairwoman Cass O’Connor and three other directors stepped down.

McGrath yesterday blamed the impact of reduced sales volumes, saying it had affected the company more significantly than previously thought. It expects statutory earnings to be between $1 million and $1.5 million, after approximately $4 million in expected one-off cash costs.

The earnings cuts comes following an initial review of the company’s accounts and operations by McGrath’s newly appointed board and chief executive, which found the profit momentum was not consistent with previous guidance. Chief executive Geoff Lucas, who was appointed to the role in February, said a refocused strategic plan to return the company to growth is being developed.

“It is important that the market is aware of the right baseline financial position that appropriately reflects the current status of the McGrath business,” Mr Lucas said.