Waterco Ltd (ASX: WAT) wishes to inform shareholders and potential investors that the Net Profit after Tax (NPAT) for 2011 is expected to be $3.2 million, against guidance previously provided of $4.5 million. The revised profit guidance is due to two key factors.
Firstly, the adverse weather events across Australia stretched into recent months and resulted in poor trading conditions for a longer period than expected.
Secondly, the improvement in the North American entities has been impeded by a wet start to the season in Canada and the weak economic conditions in North America generally. Though the entities in this region are still showing marked improvement over the performance of the previous year, this improvement is not likely to achieve the originally expected level.
Results of the April Group Year to Date accounts indicate a lower expectation, and with the poor sales revenue for the month of May factored in, an estimated profit for the full year showed a material drop in profitability to the previous profit guidance announced. The main factor is the drop in expectations in sales improvement in the Australian and New Zealand entities.
Commenting on the guidance, CEO Soon Sinn Goh said: “The weather disturbances have been frustrating for all concerned. However, we believe this weather is unseasonal and unlikely to be repeated in the next financial year. “
“Waterco will take steps to minimise expenditure to cope with this downturn in trading conditions. Additionally, with the continual flow of new products being developed and released, we expect that the following year will see improvements in trading conditions, compared with the last eleven months of trading".