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Broadway predicts pretax loss on cost overruns

Thursday 28th August 2008

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Broadway Industries said it will post a pretax loss for 2008 on cost overruns at its engineering unit and delays in a stainless steel contract in Dubai.

The company may make a pretax loss of NZ$1.5 million this year, it said in a statement. In March, it forecast earnings would rise from last year's NZ$1.29 million.

Trading at its Inmotion Engineering unit missed targets because of cost overruns and low margins, it said. Its Mercer Middle East unit suffered margin loss and payment delays on a contract in Dubai, which drove up funding costs for the project.

Sales of equipment to the meat processing industry in Australia and New Zealand also were slow, it said.

The company plans to raise NZ$8 million by way of a one-for-one rights issue at 40 cents apiece to help fund acquisitions. In the first half, it agreed to buy Lacklands Ltd. for NZ$5.5 million, gaining agencies for Ricoh, leica and Sandisk products. Broadway plans to add the acquisition to its HE Perry unit, which has distribution rights to Olympus cameras.

The company said it expects a return to profit in 2009.

The stock traded unchanged at 70 cents and has dropped 12% this year.

By Jonathan Underhill

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