Galliford Try pays 20% on profit warning related to its struggling construction arm

Galliford Try pays 20% on profit warning related to its struggling construction arm

Galliford Try lost more than a fifth of its value after a profit warning in connection with its struggling construction arm.

On a cruel day for investors, stocks fell 20.5 percent yesterday, or 149p to 576.5p, while wiping £ 165 million.

The route came after it said the full-year earnings would be £ 30 million to £ 40 million lower than predicted by analysts. It was expected to earn £ 156 million.

FTSE 250-listed Galliford said the biggest blow to profits would come from the new costs associated with the £ 1.3 billion Queensferry Crossing (photo), a bridge connecting Edinburgh and Fife

FTSE 250-listed Galliford said the biggest blow to profits would come from the new costs associated with the £ 1.3 billion Queensferry Crossing (photo), a bridge connecting Edinburgh and Fife

Galliford has now launched an evaluation of its construction arm, which says it is the & # 39; size & # 39; of the company.

It is just the newest government contractor to suffer after the collapse of Carillion and Interserve.

The problems come a day after Kier Group's new boss, Andrew Davies, published an evaluation to support his company's finances.

FTSE 250-listed Galliford said the biggest blow to the profit would come from the new costs associated with the £ 1.3 billion Queensferry Crossing, a bridge that connects Edinburgh and Fife.

It also has difficulty with higher bills linked to a bypass in Aberdeen following a project partner, Carillion, collapsed in administration, and problems with unnamed contracts that could cost as much as £ 38 million.

The paper-thin profit margin of the construction arm is less than 1%.

Galliford is divided into three units: construction, the residential block of Linden Homes and a partnership company that works on social housing and joint ventures with local authorities.

In the company's half-yearly results in February, construction represented more than half of Galliford's £ 1.4 billion sales, but only 7 percent of its £ 94 million operating result.

It said yesterday that it will & # 39; reduce the size of the business & # 39; to focus on its key strengths and to enter into fewer contracts in the future.

An evaluation ends next month and the outcome will be announced on May 21.

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