September 9, 2009 / 12:30 PM / 9 years ago

UPDATE 2-ADF Group Q2 profit drops 56 pct, misses Street view

* Q2 EPS C$0.05 vs est. C$0.07

* Revenue falls 22 pct

* Sees higher revenue in second half of FY10

* Shares fall 7 pct

(Adds conference call details, analyst comments, updates share movement)

By Sakshi A Mattoo

BANGALORE, Sept 9 (Reuters) - Canadian ADF Group Inc’s (DRX.TO) second-quarter earnings more than halved and missed Wall Street consensus view amid delays in realization of revenue from a contract, sending its shares down as much as 7 percent.

On a conference call with analysts, the company said it is confident of achieving “satisfactory performance” in the second half of the current year as it sees the market ramping up.

The company also said it has many projects up in the pipeline and is confident of contract renewal growth in the upcoming quarters.

“Third quarter will be a better quarter than the second one,” Salman Partners analyst David Brill said.

ADF said it has started negotiating on prices of certain contracts and expects to finalize them in the next three to six months.

“I believe the company will be able to settle on price and realize revenue for all the extra work that they did,” Brill said.


For the second quarter ended July 31, the company’s net income was C$1.8 million, or 5 Canadian cents a share, compared with C$4.1 million, or 11 Canadian cents a share, a year ago.

Revenue of the company, which makes steel superstructures for building constructions, fell 22 percent to C$18.7 million.

Analysts on average were expecting earnings of 7 Canadian cents a share, before items, on revenue of C$20.6 million, according to Reuters Estimates.

Gross profit margin and EBITDA margin were down, at 24 percent and 19 percent, respectively, compared with 29 percent and 25 percent in the second quarter last year.

The decrease in revenue is due to different mix of contracts, while fall in margin is due to the time lag between the recognition of costs and revenue of a contract, the company said in a statement.

“EDITDA margin will bounce back from 19 percent to between 23 percent to 25 percent mark,” analyst Brill said.

Shares of the Terrebonne, Quebec-based company were trading down 13 Canadian cents C$2.36 Wednesday afternoon on the Toronto Stock Exchange. (Editing by Maju Samuel)

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