16th Apr 2019 08:40
LONDON (Alliance News) - Galliford Try PLC said Tuesday it is scaling back its Construction business, resulting in a GBP30 million to GBP40 million dent in profit for the current year.
Shares in the FTSE 250-listed housebuilder were down 17% in early morning trade at 602.25 pence each.
The company said it is undertaking a strategic review of its Galliford Try and Morrison Construction businesses, which will lead to a reduction in size of the unit. The company said the unit will instead focus on its "key strengths" where it has a "track record of success".
Galliford said: "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."
As a result of the review, Galliford expects that in its financial year 2019, ending June 30, post-exceptional pretax profit will be GBP30 million to GBP40 million lower than current consensus analyst forecast of GBP156 million.
The company said the single largest element of the review will be its Queensferry Crossing joint venture, the road bridge built alongside the Forth Road Bridge over the Firth of Forth. Galliford noted the joint venture recently increased its estimated final costs for the project.
The company stressed its claim for the completed Aberdeen Western Peripheral Route, known more colloquially as the Aberdeen bypass, and the previously disclosed GBP38 million work in progress for three contracts for a single client for the project will remain unchanged.
Galliford added: "The board anticipates finalising its conclusions in the next few weeks and will share the detail of the review of the Construction business along with a further update on group trading in its scheduled statement on May 21."
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