Wembley firm won't make a profit

Shares in Multiplex Group, which is building the new Wembley stadium, fell as much as 19% after it said it would not make any money on the project.

The Australian firm said it would only break even on the 1.2bn Australian dollars (£458m; $874m) rebuild, after a rise in costs on the work. Any profits would depend on the outcome of legal cases resulting from a change in steel contractor, it added. It cut A$68m from profit targets for Wembley and another UK project.

Investors were shaken by the news and the firm's shares fell to a four month low of A$4.50, before recovering to close 16% down at A$4.67. The decline came despite Multiplex reporting an 11% rise in pre-tax profits to A$67.7m for 2004 and reaffirming its 2005 profit forecasts. Increased costs at Wembley and a separate development in London's Docklands saw Multiplex's construction division report profits of A$35.1m.

The firm said the result was below expectations but stressed that the majority of its UK projects - which also include the White City redevelopment scheme in west London - were performing strongly.

To recoup any profit from Wembley, where the firm changed its steel contractor due to a legal dispute, Multiplex will have to win legal claims against subcontractors. These claims could take up to two years to resolve. "Multiplex believes its claim are sound and ultimately will exceed the level needed to support the break even position," it said. "It is expected that profits will be possible in future periods as the claims are finalised." Wembley Stadium is to due to be completed in January and will officially open for the 2006 FA Cup Final. Analysts expressed concern at the unexpected paring back in profit. "Such a big writeback on the Wembley project in such a short period has impacted on management credibility," Simon Wheatley, from Goldman Sachs, told Reuters.
