Carillion chief quits after profit warning
THE board of Carillion is to carry out a “comprehensive review” of the business, with the firm’s chief executive to step down, after warning that revenue will fall short of expectations.
In a half-year trading update, the construction and infrastructure giant downgraded its fullyear revenue guidance, with sales now expected to be between £4.8bn and £5bn and its overall performance forecast to be “below management’s previous expectations”.
In addition, following a review carried out by KPMG, the group said it will book an £854m provision linked to certain UK and overseas contracts.
Meanwhile, chief executive Richard Howson is to step down and be replaced by Keith Cochrane on an interim basis while a search is undertaken for a permanent boss.
Philip Green, Carillion’s non-executive chairman, said that the action is needed to reduce the firm’s borrowing.
“We must take immediate action to accelerate the reduction in average net borrowing and are announcing a comprehensive programme of measures to address that, aimed at generating significant cashflow in the short-term,” he said.
“In addition, we are also announcing that we are undertaking a thorough review of the business and the capital structure, and the options available to optimise value for the benefit of shareholders.”
Carillion also reported a 5% fall in pre-tax profits to £146.7m last year and has previously said the pace of new order intakes has slowed since the vote to leave the EU.
The group said it had also seen some delays in UK public spending decisions following the referendum and added that low oil prices had hit customer spending in the Middle East.