Skip to main content
  • Register
  • Help
  • Contact us
  • Log out of your HL account

Carillion - Shares fall after more disappointing results

George Salmon | 29 September 2017 | A A A
Carillion - Shares fall after more disappointing results

No recommendation

No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

Carillion plc Ordinary 50p

Sell: NaN | Buy: NaN | Change NaN (NaN%)
Chart View factsheet

Market closed | Prices delayed by at least 15 minutes | Switch to live prices

Shares in troubled support services group Carillion fell 13.6% following the release of what interim CEO Keith Cochrane described as 'disappointing' interim results.

Underlying revenue was flat at £2.5bn, however restructuring and other exceptional costs (including £845m of pre-announced provisions against the construction services business) led the group to report a £1.2bn pre-tax loss.

On an underlying basis, pre-tax profits fell 40% to £50m as margins dipped from 4.9% to 3.5%. Carillion says this is due to the phasing of Public Private Partnership (PPP) disposals and trading contracts that have been provisioned against at zero margin.

New H1 orders plus probable orders were £2.6bn, with total orders plus probables stable at £16bn.

Also this half, the pension deficit fell by £76m to £587m, however average net debt rose by £108m to £694m and is expected to rise again, to between £825m and £850m, by year-end.

Looking ahead, Carillion expects results for the full year to be lower than current market expectations.

Business review:

After undertaking a review of its contracts, there is no change to the previously announced provisions of £845m against construction contracts, however a further £200m has been written down against support services contracts.

The group is now aiming to raise £300m from asset sales, raised from the previous target of £125m. Discussions regarding the sales of Carillion's Canadian and UK Healthcare businesses are ongoing.

There are also plans afoot to become 'a lower risk, lower cost, higher quality business generating sustainable cash backed earnings'. This will mean improving cash flows and the balance sheet, as well as reducing costs. The group's initial cost reduction target is £75m per annum by mid-2019.

Carillion expects to incur further restructuring costs of between £75m and £100m in the second half.

Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.