Galliford Try to downsize construction arm after profit warning
Galliford Try is to launch a strategic review of its construction business after it warned that its full-year pre-tax profit would be £30-40m below analysts’ expectations.
The company said it planned to reduce the size of its construction arm and focus on its key strengths “in markets and sectors with sustainable prospects for profitability and growth, where we have a track record of success”.
The review includes an assessment of operational progress and contract positions throughout the construction business.
Galliford Try said it expected its review to affect profitability in the current year as a result of some current contracts, the effect of some recent adverse settlements, and the costs of the restructure. The biggest element of that relates Morrison Construction’s role on the £1.35bn Queensferry Crossing project, where it is working in joint venture with Dragados, Hochtief, and American Bridge International. Galliford Try said it had recently increased its estimated final costs on the project.
The company has also previously disclosed a £38m work in progress balance in respect of three contracts on the now-completed Aberdeen Western Peripheral Route.
Meanwhile, Galliford Try said the majority of its construction business was performing well and that it didn’t expect any “significant impact” from the changes on its average net debt for the year.
The review is expected to conclude in the next few weeks details will be revealed in its next trading update on 21 May 2019.