Design and construction services company VDM Group (ASX:VMG) has reported a swing to a $35.5 million net loss, on slumping revenue and impairment charges.
But the company, which had reported a $16.8 million profit the year before, expects restructuring and cost saving efforts to lead to a profitable first half of FY12.
VDM blamed an industry-wide slowdown on new contract awards for a 36.3% decrease in revenue to $33.2 million. This coincided with the completion of some major projects in the first half of the financial year.
Earnings were also hit by significant items totalling $39.2 million, including $21.2 million in goodwill impairment charges on VDM's consulting division, and restructuring and other costs totalling $14.4 million.
The declines were in line with earlier estimates.
CEO Andrew Broad said the results were “completely unacceptable.” But he said the company is “firmly committed to restoring profitability and delivering shareholder returns.”
Cost reduction initiatives include an ongoing staffing level review, which has resulted in a headcount reduction of 105 since January.
Broad said VDM will make further operational, financial and corporate changes, and aims to become cashflow neutral by the end of the current quarter.
VMG shares ended Thursday's trading unchanged at $0.160.