Carillion shares tumble as losses spiral to £1.15bn
In delayed half-year results, Carillion revealed it has made provision of £200 million for losses on its support services contracts and has taken an impairment charge of £134m on its UK and Canadian construction businesses.
This is on top of an £845m write-off on construction contracts announced in July.
Carillion’s full-year revenues are now forecast to be between £4.6bn-£4.8bn, down from a previous expectation of £4.8bn-£5bn.
The firm saw its share price fall 18% as a result.
Interim chief executive, Keith Cochrane, said a further £75m to £100m is being spent restructuring the business by the end of 2017, though expected it would take three to five years to turn the business around.
He said: “This is a disappointing set of results which reflects the issues we flagged in July and the additional £200m provision for our support services business that we have announced today. We now expect results for the full year to be lower than current market expectations.
“The strategic review that we launched in July has enabled us to get a firm handle on the group’s problems and we have implemented a clear plan to address them. Our objective is to be a lower risk, lower cost, higher quality business generating sustainable cash backed earnings. In the immediate short term, our focus is to complete the disposal programme, accelerate our action to take cost out of the business and get our balance sheet back to a place where it can support Carillion going forward.
“No one is in any doubt of the challenge that lies ahead. We have made an encouraging start and the ambition is there to build on that progress. At the heart of this company, there is a strong core. Supported by an operating model that manages risk much more effectively and led by a fresh management team with a mandate to drive cultural change, I am confident that a strong business can emerge.”
Mr Cochrane added that Carillion had agreed a further £140m committed facility with several banks, as it braced for net borrowing to soar to between £825m and £850m, as Carillion worked through contracts completing by the year end.
It had also reduced its pension fund deficit by £80m and had the potential to cut it by another £120m.