Engineering and construction company UGL Ltd
(ASX:UGL) says uncertainty over the federal government’s planned Resource Super Profits Tax may see work dry up in the construction industry within 12 months.
CEO Richard Leupen has told the ABC that the underlying state of the resources sector is healthy, but uncertainty over the tax will put many project approvals on hold.
Mr Leupen says he is concerned that if projects are not approved now, that there will be a gap of project approvals in a year to 18 months time.
About 80% of UGL’s revenue is from recurring maintenance work, rather than new projects, and 60% of it is driven by Australian government contracts.
Mr Leupen expects the tax could cut between 10% and 15% off its revenue from projects in 2012.
On Thursday, the company announced it had won $280 million worth of contracts for maintenance work and project extensions, including a new facilities maintenance project with Anglo Coal.
UGL posted a profit of $142.48 million for the 2009 financial year.
