Navitas is set to lose some government contracts, and its shares are getting hammered

A surfer falling off his board at Bondi Beach in February. Ryan Pierse/Getty Images

Shares in Navitas fell hard after the education provider flagged a decline in revenue from federal government contracts.

A short time ago, the shares were down 15% to $4.21.

Navitas says its been informed by the Department of Education and Training that there will be a smaller number of contracts to deliver its Adult Migrant English Program.

The company says this could mean a fall in earnings of between $12 million and $14 million next financial year.

“The proposed reduction in contract regions is disappointing news as Navitas has been delivering this important program to a high standard since 1998,” says CEO Rod Jones.

“However we will continue to focus on providing high quality outcomes to our clients in our remaining and new contract regions; and ensure any transition for clients is as smooth as possible.”

Navitas posted an 18% rise in net profit after tax to $53.3 million for the half year to December. However, revenue was down 7.7% to $479 million.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.