Churchill Corp estimates surprise loss on project delays

Mon Jul 23, 2012 1:13pm EDT
 
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(Reuters) - Construction company Churchill Corp CUQ.TO estimated a surprise second-quarter loss as frequent rain hampered work at an airport runway project and a residential project, sending its shares down 31 percent to a three-year low.

Utilization of the company's earthmoving equipment fell in May and June, while administrative delays in starting new mining projects in Northern Saskatchewan also pushed back sales, Churchill said.

The company, which is also building a C$170 million, 33,000-seat football stadium in Winnipeg, Manitoba, said the project has also been delayed as its subcontractors failed to deliver some steel structures on time.

Cost of the project will rise as a result, Churchill said.

"We are pursuing a claim against the structural steel cut subcontractor for these losses," Don Person, CEO of the company's general contracting segment, said on a conference call with analysts.

The segment is estimated to report a core loss of between C$500,000 to C$900,000 in the second quarter, compared to earnings before interest, taxes, depreciation and amortization of $7.6 million a year earlier.

"The big issue with Churchill is that the material de-rating of expectations that will take place following today's profit warning is the second such occurrence in less than a year," said AltaCorp Capital analyst Maxim Sytchev in a research note.

Sytchev downgraded the company to "underperform" from "sector perform" and cut his price target on the stock to C$9 from C$15.50.

The company, which will report second-quarter results on August 8, estimated net loss of between C$4.0 million and C$4.4 million on revenue of between C$292 million and C$298 million.   Continued...