WYG in second profits warning

Douglas McCormick, CEO of WYG
Douglas McCormick, CEO of WYG
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Shares in global project management consultancy WYG slumped 33 per cent following a second profits warning in three months.

The Leeds-based firm said that annual profits will be "substantially lower​"​ than current market expectations​. It now anticipates operating profit for the full year will be in the range of £3.5m to £4.0m, ​down from analysts' forecasts of £7m.

WYG blamed ​the shortfall on​ the loss or delay of new contracts ​it had expected to win in the current period and significantly lower than anticipated volumes of work under certain major framework contracts.

The group's shares closed down 22p at 45p.

Analyst James Tetley at N+1 Singer said: "Since the trading update in August, WYG’s Consultancy Services business has continued to face challenges.

"As a result, the board has taken a more cautious view of the full year outlook and we revise our forecasts accordingly, reducing pre-tax profit forecasts by 57 per cent in 2018 and by 43 per cent in 2019.

"It is clear that the issue principally relates to lower than expected activity levels in the UK. Whilst it is disappointing to downgrade forecasts again, the order book is strong and the new management team is taking steps to address recent under performance and return WYG to growth."

Analyst Guy Hewett at FinnCap added: "WYG’s International Development business is performing in line with previously revised expectations, but Consultancy Services has continued to experience lower trading volumes than anticipated.

"This is due to the loss or delay of certain new contracts that the group had expected to win and significantly lower volumes of work under certain major framework contracts. Operating profit is now expected to be in the range of £3.5m to £4.0m against our current expectation of £7.1m.

"While clearly disappointing, the medium to long-term opportunity remains undiminished, supported by UK investment in infrastructure. We will downgrade our forecasts in line with the announcement and await further detail from management on how a return to growth will be achieved."

WYG will report half year results on December 5.

Douglas McCormick, C​EO of WYG, ​said:​ ​“Although it is very disappointing to be making a further announcement revising expectations of WYG’s near term performance, the ​b​oard is confident that the underlying business is robust and that, supported by a strong order book, we are taking the correct steps to return to a growth trajectory in the medium term.”