The Adacel Technologies Limited (ASX: ADA) share price has fallen 12% to $2.25 today after the company downgraded its full year profit guidance to be in the range of $7 million to $7.5 million.
This is a big downgrade from the company's prior guidance for net profit to be "more than 10% higher than 2016" and the savage share price falls come as no surprise.
The aviation software and training company blamed today's downgrade on "longer than anticipated contract administration processes on a number of notified awards and delayed decisions on a series of programs, both competitive and sole source."
As a consequence of the contract delays and other problems the company now expects revenue from its "Systems" business to be 35%-40% below FY 2016's result. However, the company's "Services" business is still expected to grow revenues around 10% over FY 2016.
The unpredictable nature of Adacel's major contract wins means its earnings can be lumpy, but over the long term investors believe they should head higher.
Despite today's big profit downgrade the good news is that the company expects to be able to maintain FY 2017's dividends at the same level as those paid out in FY 2016.
