Forge halts trading pending financial update

Following a dramatic profit warning late last year, mining services company Forge Group has entered into another trading halt as it prepares to make an announcement about its financial status.

Requesting a trading halt on January 10 the company told the ASX it expects to remain on hold until Tuesday January 14, pending a material update on its financial position.

In November Forge told investors it expects profits to be well below guidance this financial year, revealing a $127 million write down which it attributed to two power station projects.

At the time the company said an internal review had "identified concerns in relation to the underperformance" in relation to its $420 million Diamantina contract in Queensland and its $150 million contract with Rio Tinto at the West Angelas iron ore mine in Western Australia. 

In September the company announced it was awarded a $1.47 billion contract for engineering and construction works at Gina Rinehart’s Roy Hill iron ore project near Newman, Western Australia.

Samsung C&T allocated the contract to the services company under a joint venture agreement with Spanish engineering, procurement and construction firm Duro Felguera.

Forge expects its share of the works to be valued at around $830 million.

Throughout 2013 the profitability of mining service companies significantly declined, with the likes of WorleyParsons, Downer EDI, Leighton Holdings, Forge Group and NRW all reporting a tough year and some lowering profit guidance for 2014.

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