Forge casts cardinal sin

Forge Group (FGE) is the worst performing stock on the Uncapped 100 this morning after it committed the cardinal sin for the reporting period – it didn’t pay enough dividends to shareholders.

The stock crashed 9.9% to $4.73 and if it finishes at the current level, the fall would represent its biggest sell-off in four years.

Never mind that the engineering contractor posted record full year earnings. What’s front and centre is management’s decision to keep its final dividend the same as the previous year’s eight cents a share despite bolstering net profit by 28% to $62.9 million and lifting sales by 36% to $1.1 billion.

Sales were ahead of management’s guidance and consensus expectations of $993.7 million, but profit was a modest 1.6% behind analysts’ forecast.

Investors were counting on Forge to cough up a final dividend that is at least two cents more, and not even a positive outlook from management could mask the disappointment.

The group is sitting on a $1.3 billion order book and management said it is confident about 2013-14 thanks to its diversified business and its growing asset management business, which will provide recurring revenue to the group.

Forge is part of the Uncapped 100.

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