THE Worthington Nicholls Group has announced it expects its profits to fall below market expectations, for the financial year ending September 30, 2007.
Assuming turnover of £31.5m for this financial year, it is expected the firm's gross margin will be £4.9m below market expectations.

The fall is mainly caused by contract delays due to the unseasonal weather. In total £3.3m in lost profits is attributed to delayed contracts, of which £3.1m was lost as a direct result of flooding across the UK. The company's maintenance business has also been hit by cooler than average weather conditions experienced across the UK this summer.

The company had been short-listed to tender for the installation of air conditioning into 3,000 bedrooms for a hotel chain. Most of this program was to be delivered this financial year but on August 15, the firm was told this tendering process would not finish until October. If successful in its tender, the firm's expected £3.5m revenue will fall outside this financial year.

Two hotel groups told the firm that capital expenditure on air conditioning installations that were due to start, would be delayed because the firms have suspended certain capital expenditure pending completion of flood damage repair cost assessment on its hotels. Another hotel group has yet to confirm anticipated works following flood damage at one of its hotels.

This summer's unseasonal weather was blamed for lower than expected demand for the firm's maintenance division. The run rate of maintenance call-outs has been lower than expected following a cooler than average summer, leading to less air conditioning usage and consequently less breakdown and maintenance work required.

This problem was compounded by a delay in starting a hotel group contract which leaves the company's maintenance division underperforming by £2.5m this financial year.