Carillion half year profits at £1.15bn loss

Carillion half year profits at £1.15bn loss”

A Cabinet Office spokesperson said: "Carillion is a major supplier to the government with a number of long-term contracts".

Beleaguered Wolverhampton-based facilities management giant Carillion made a £1.1bn pre-tax loss during the first half of the year.

There is no further damage to report on construction contracts, beyond the previously announced provision of £845m being booked for loss-making jobs, but there is a further £200m provision to cover losses on support services contracts.

According to BBC, Carillion's full-year revenues are now forecast to be between £4.6bn-£4.8bn, down from a previous expectation of £4.8bn-£5bn.

Underlying pre-tax profit was down 40% to £50.3m due to the phasing of PPP equity disposals and the trading of contracts with provisions at zero margin.

Interim boss Keith Cochrane described the results as "disappointing".

"It reflects the issues we flagged in July and the additional £200m provision for our Support Services business that we have announced today".

Troubled UK building and services firm Carillion has seen its share price fall 18% after it said full-year results would be below current expectations.

"No-one is in any doubt of the challenge that lies ahead", said Mr Cochrane.

Ministers leapt to the support of the firm, saying the government is "supportive" of the firm.

Carillion said transformation of the business "including a radical change in culture" will take three to five years.

"We remain supportive of their ongoing discussions with their stakeholders and await future updates on their progress". The company's chief executive had to step down after the management said it was struggling to stay within its borrowing limits. Full-year average net debt is expected to be between £825m and £850m.

The group had previously blamed poor orders on some delays in United Kingdom public spending decisions following the European Union referendum, while low oil prices had hit customer spending in the Middle East.

He added that a strategic review launched by Carillion in the summer has enabled the business "to get a firm handle" on its problems.

Shares in Carillion rose earlier this week after a newspaper reported that a Middle Eastern buyer was considering a bid for the group.

"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".

To this end, Carillon said that discussions are ongoing regarding sales of its business in Canada and the United Kingdom healthcare arm.

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