McGrath cuts earnings outlook as sales slump
MCGRATH’S new chief executive is hoping to end the turmoil engulfing the real estate agency after halving its full-year earnings forecast.
Releasing a trading update yesterday, Geoff Lucas issued yet another profit warning.
The embattled company says it expects to generate fullyear earnings on an underlying basis, which excludes one-off costs, of $5 million to $5.5 million.
That is down from a forecast of $10.6 million to $11.6 million issued in January when former CEO Cameron Judson, chair Cass O’Connor and three other directors quit.
McGrath yesterday blamed reduced sales volume, saying this had affected the company more significantly than previously thought.
It expected earnings before interest, tax, depreciation and amortisation of $1 million to $1.5 million, after $4 million in one-off costs.
The forecast cuts follow an initial review of the company’s accounts and operations by Mr Lucas and McGrath’s newly appointed board, which found the profit momentum was not consistent with the previous projection.
Mr Lucas, who was appointed CEO in February, said a refocused strategic plan to return the company to growth was being developed by the board and management team.
Mr Lucas said the company’s cost-cutting program, put in place last year, was starting to generate benefits.