The UK’s second-largest contractor Carillion has revealed pretax losses of £1.15bn ($1.5bn) in the first half of 2017, and has made a £200m writedown in the value of contracts entered into by its support services division.
The company’s share price, which had been boosted by rumours that a Middle Eastern firm was considering a takeover, fell 10% on the news, although it quickly recovered 5% of that loss.
Carillion published its results for the six months to 30 June this morning after a delay while it tried to deal with the aftermath of a profit warning in July.Â
"Nobody is in any doubt of the challenge that lies ahead," said interim chief executive Keith Cochrane.
He added that the strategic review of the business launched in July had enabled management to get "a firm handle" on the group’s problems.
Carillion will focus immediately on a disposal programme and cost cutting. Likely disposals include the company’s Canadian business and its UK healthcare operations.
The review blamed unprofitable contracts, a lack of transparency and accountability, and a lack of professionalisation.
Carillion’s turnover was flat at £2.5bn, and revenue for the full year is expected to be between £4.6bn and £4.8bn, about £200m below the previously expected range.
The net debt incurred during 2017 is expected to be between £825m and £850m, including further restructuring costs of between £75m and £100m in the second half.
Carillion has also agreed another £140m of funding from its banks to provide working capital while it restructures.
Image: The company is implementing a strategic recovery plan (Carillion)