Embattled property group McGrath Limited (ASX: MEA) has issued another profit warning, saying its full year guidance will be cut by half because of lower sales volumes.
The company says it expects underlying full-year earnings of between $5 million and $5.5 million, which is down significantly from its January forecast of between $10.6 million and $11.6 million announced in January.
"The impact of reduced sales volumes has affected the company more significantly than the prior forecast contemplated," says newly appointed McGrath CEO Geoff Lucas.
"It is important that the market is aware of the right baseline financial position that appropriately reflects the current status of the McGrath business and trading conditions."
McGrath says it has generated underlying earnings before interest, tax, depreciation and amortisation of $720,000 for the eight months to the end of February.
Lucas says the new board, which was named last month and included himself along with Peter Lewis and Andrew Robinson, had established a "refocused strategic plan" to turn the company around in tandem with a cost cutting program.
"The cost cutting program put in place late last year is starting to generate the financial benefits expected, and we are seeing an uplift in performance so far this month, with expectations of continued rebuilding to the end of this financial year," Lucas says.
As part of the strategic plan, McGrath says it will recruit new high quality franchisees and agents into the company's network and implement "the right corporate office structure to generate further efficiencies and better support the McGrath network".
The announcement is a continuation of a tumultuous two years for McGrath as a listed company which in recent months has been rocked by profit warnings, boardroom and staff exits and media reports that John McGrath has more than $16 million in gambling debts.
Last month the company fell to a $25.5 million first-half loss on the back of a series of earnings downgrades and the ongoing allegations that John McGrath has a $16 million gambling debt.
McGrath was forced into writing a letter to the ASX to address the claims which he has denied.
He also denied claims that he has been using company money to fund his expensive gambling habit although he admits he has an account with a bookmaker but says the account is not secured by his shares in the company.
Further controversy arose when it was alleged that John McGrath has a $100 million lending facility which is allegedly funding his gambling habit, which he also denied.
Shares in the real estate company remain at a record low of $0.42 at around midday AEDT. It listed in 2015 at $2.10.
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