Australia's Downer EDI <DOW.AX> cut its annual profit forecast on Thursday amid a surge in costs at its loss-making construction contracts, sending the company's shares sharply lower to mark their worst session in nearly a decade.
The revised outlook comes amid weak global business investment and as Australia's economy stutters along with sluggish wage growth and high consumer debt.
The New South Wales-based company slashed its previous estimate of net profit after tax and amortisation by nearly 18% to A$300 million ($205.17 million), and said it will shift focus towards long-term contracts.
After significant cost overruns in December and January, the engineering contractor said a further A$43 million will be needed in order to complete its loss-making projects.
The engineering firm also flagged a A$300 million drop in full-year construction revenue and A$10 million restructuring charges related to staff reductions.
Downer shares slumped as much as 26.3% to A$6.45, their lowest in more than a year.
The bleak outlook comes on the heels of an announcement by larger rival CIMIC Group <CIM.AX>, which flagged a one-off charge of A$1.8 billion from the planned exit from the Middle East. CIMIC also scrapped its final dividend and expects profit toward the lower end of its outlook.
(Reporting by Arundhati Dutta in Bengaluru, Editing by Sherry Jacob-Phillips)
