Reverse Corp forecasts up to 70% profit slump

Reverse charges calling service provider Reverse Corp (ASX:REF) expects its FY11 profit to fall to as low as $1.2m on reduced call volumes and forex losses

Reverse Corp (ASX:REF) expects an up to 70 per cent decline in full-year profit for FY11, on slowing call volumes and the strong Australian dollar.

The company, which operates the reverse charges calling service 1-800 Reverse, has forecast a profit for the financial year of between $1.2 million and $1.6 million.

This compares to a $4.2 million profit from FY10, which itself was down from a $13.3 million profit in FY09.

The company expects ebitda of $2.8 million to $3.2 million for FY11, from a $9.5 million ebitda - before an impairment loss of nearly $1.5 million - in FY10.

In a market update, Reverse Corp attributed the projected decline to lower call volumes, start-up costs in New Zealand and the renewal of marketing campaigns in Australia and in the UK, where it provides the 0-800 Reverse service.

Contributions from overseas have also been muted by exchange rates, the company said.

Reverse Corp added it is in continuing discussions with Telstra (ASX:TLS) over the renewal of its fixed-line license, and is in talks with Australian mobile operators to extend access to its service.

REF shares stayed flat on Thursday at $0.075.

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