Changes sig­nalled to avoid Car­il­lion de­rail

Daily Express - - CITY & BUSINESS - By David Shand

IT COULD take five years to re­build the creak­ing con­struc­tion business Car­il­lion after it plunged £1.15bil­lion into the red, its boss warned yes­ter­day.

In­terim chief ex­ec­u­tive Keith Cochrane, who took over from Richard How­son after a profit warn­ing two months ago, wants a “rad­i­cal change in cul­ture” to trans­form the firm rocked by huge losses on con­struc­tion deals.

Staff re­dun­dan­cies and less gen­er­ous pen­sions are loom­ing as the com­pany seeks to shore up its fi­nances.

It is look­ing to gen­er­ate £300mil­lion by sell­ing off non-core op­er­a­tions, but may also have to tap in­vestors for cash.

Car­il­lion is part of a con­sor­tium which re­cently won £1.34bil­lion of con­tracts on the HS2 rail scheme and whose projects have in­cluded the ex­pan­sion of Liver­pool Football Club’s An­field sta­dium.

It fell to a £1.15bil­lion half-year pre-tax loss from an £84mil­lion profit last time as it wrote off £200mil­lion more on un­der­per­form­ing sup­port ser­vices con­tracts, hav­ing al­ready taken an £845mil­lion hit on prob­lem con­struc­tion deals.

Car­il­lion has called on banks for ex­tra credit of £140mil­lion and its debt is ex­pected to climb to £850mil­lion this year.

It is aim­ing to re­duce its £587mil­lion pen­sion deficit by £120mil­lion, through scrap­ping dis­cre­tionary pay­ment in­creases and bas­ing fu­ture in­creases on the lower con­sumer prices in­dex rather than the re­tail prices in­dex mea­sure of in­fla­tion. Shares, which had risen sharply this week on takeover spec­u­la­tion, plunged 13p to 51¼p as Car­il­lion warned its an­nual re­sults would fall short of ex­pec­ta­tions. Cochrane said: “No one is in any doubt about the chal­lenge that lies ahead. At the heart of this com­pany there is a strong core. Sup­ported by an op­er­at­ing model that man­ages risk much more ef­fec­tively and led by a fresh man­age­ment team with a man­date to drive cul­tural change, I am con­fi­dent that a strong business can emerge.”

Car­il­lion is tar­get­ing cost sav­ings of £75mil­lion by 2020 in­clud­ing “re­moval of lay­ers and du­pli­ca­tion of man­age­ment” and “in­creased pro­fes­sion­al­ism”.

IN THE REDS: An­field and HS2 have not saved Car­il­lion, says Cochrane, be­low

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