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Ausenco Limited (AAX) downgraded its full year sales revenue guidance for 2009 to between $435 million and $465 million and underlying net profit after tax of between $26 and $30 million as a result of delays in the awarding of contracts. The company said large-scale EPCM projects that it anticipated would be awarded in the fourth quarter of 2009 are now more likely to be awarded early in 2010.

CEO, Zimi Meka, said the guidance followed a review of significant contracts currently underway and those expected to be awarded during the remainder of the year.

“While we have optimised our cost base, project award delays combined with factors such as a strengthening Australian dollar and client defaults have contributed to stable financial performance in October, rather than the increase we were expecting,” MR Meka said.

However, Mr Meka said the company was still well positioned for future growth and strong earnings potential.

“There is still a lot of activity in the sectors in which we operate, resulting in increased tendering for more work than in previous years,” Mr Meka said.

“Clients, while cautious, are increasingly more confident about improving business conditions into 2010 and 2011.”

The company said its Process Infrastructure business has won a number of new feasibility studies contracts, including a $10 million of new port evaluation work to assess the viability of more than $1 billion of new port capital developments in Peru, Brazil, Mozambique and Australia, where construction is expected to commence in 2011.

“We are seeing the continued improvement in business conditions from the first half of 2009 with $40 million of new early engineering works programs commencing last month on US$1.2 billion of new coal, copper and gold projects in South America, Africa and Asia,” Mr Meka said.

“Our third quarter results have improved operating earnings, with some of our offices commencing the re-hiring of personnel to meet new study and engineering demands.”

Ausenco expects to see strong growth in 2010 as a result of an increase in the levels of new FES/FEED and EPCM project opportunities in Canada, Africa and South America.

“We have continued to build upon our longer term strategies to establish a permanent presence in Jeddah and North America in response to expected increases in demand in the Middle East North Africa and our Energy business,” Mr Meka said.

“Despite these positive signs, clients are taking more time to make decisions on when to proceed with the on-site procurement and construction activities for their projects.”

As at 1022 AEDT, Ausenco shares were down 15c to $4.23.

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