Galliford Try to shrink construction arm amid new profit warning
Galliford Try is to undertake a strategic review of its construction arm that will reduce the size of the business after issuing a fresh profit warning this morning.
The firm said the review will focus on its key strengths in markets and sectors with sustainable prospects for profitability and growth, where it has a track record of success.
The strategy rethink comes amid a new warning that its annual profits this will be £30 million to £40m down on previous expectations due to restructuring costs and additional provisions for loss making contracts.
Analysts had expected £156m for the full year, but this could now be reduced to as low as £116m.
Shares in the company were down 20% this morning.
The single largest element in adverse settlements relates to the £1.4 billion Queensferry Crossing project after the joint venture with Dragados, Hochtief and American Bridge International had to meet costs of delays due to high winds.
“The board anticipates that this review will result in reduced profitability in the current year reflecting a reassessment of positions in legacy and some current contracts and the effect of some recent adverse settlements, as well as the costs of the restructure,” the company announced today.
“The single largest element relates to the Queensferry Crossing joint venture, which has recently increased its estimated final costs on the project. With regard to the claim in respect of the completed Aberdeen Western Peripheral Route (AWPR), and the previously disclosed £38m work in progress balance in respect of three contracts for a single client, our position is unchanged.”
Further details of the Galliford Try plans are set to be released alongside a trading update on May 21.
The announcement comes a day after Kier launched its own strategic review aimed at turning around the group’s fortunes.