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McGrath cuts full-year earnings guidance

 

Embattled property group McGrath Limited has cut its full year earnings guidance by half, saying the impact of reduced sales volumes has affected the company more significantly than previously contemplated.

The company expects to generate underlying full-year earnings of between $5 million and $5.5 million, down from between $10.6 million and $11.6 million announced in January.

McGrath said statutory earnings are expected to be between $1 million and $1.5 million, after approximately $4 million in expected on-off cash costs.

The earnings cuts comes following an initial review of the company's accounts and operations by McGrath's newly appointed board and chief executive, which found the profit momentum was not consistent with the previous guidance.

McGrath shares were down 2.33 per cent to 42 cents by 1050 AEDT on Monday.

Chief executive Geoff Lucas, who was appointed to the role in February, said it is important that the market is aware of McGrath's current status and trading conditions.

"The impact of reduced sales volumes has affected the company more significantly than the prior forecast contemplated," Mr Lucas said.

"We are pleased that this period is behind us, and are encouraged by current activity levels generating improved results."

McGrath is coming out of a tumultuous period marked by profit warnings, boardroom and staff exits and, most recently, media reports alleging Mr McGrath had accumulated a $16 million gambling debt.

Mr McGrath had rejected the allegations and issued a statement in February saying his gambling account was within his means.

Mr Lucas, who was McGrath's chief operating officer for eight years from 2008 to 2016, on Monday said the company's cost cutting program put in place last year is starting to generate financial benefits.

"We are seeing an uplift in performance so far this month, with expectations of continued rebuilding to the end of this financial year," he said.

"At the core of the McGrath business is a high quality and well respected real estate agency with a market leading position."