Merrill cuts Wheelock forecasts

WHEELOCK & Co has businesses in trading and premier retailing, property development, financial and commercial services, infrastructure, communications and hotels.

Merrill Lynch recently downgraded its recommendation on the company to reduce (from accumulate), citing a 'rapid deterioration in financial position'.

The brokerage has slashed earnings estimates because of rising debts.

Merrill believes consolidated net debt rose 90 per cent last year, or by $9 billion to $19.2 billion, raising its gearing to 38 per cent from 18 per cent.

The resulting higher interest expense, coupled with lower development contributions, led the brokerage to slash earnings estimates for the 1999 and 2000 financial years by 70 per cent and 62 per cent. It now expects earnings per share of 41 cents in both years, compared with previous estimates of $1.39 and $1.08.

The brokerage was also put off by Wheelock's $200 million in treasury provisions this year.