Thousands of Carillion jobs face the axe

++ Losses hit £1.2bn ++ Canadian arm up for sale ++ Pensions cut

CARILLION could be forced to cut thousands of jobs after the troubled builder slumped £1.2bn into the red.

Shares in the crisis-torn firm plunged 20pc yesterday as it revealed half-year results, which had it had delayed after issuing a profit warning in July.

The warning saw stock plunge more than 70pc in a week after the firm announced an £845m hit relating to contracts it had already signed. It also discovered a £134m charge relating to its British and Canadian businesses.

Yesterday it revealed a further £200m write-off on 14 deals, as it reported losses for the six months to June 30 of £1.15bn.

It followed this by announcing swingeing job cuts and an overhaul of its pension scheme to reduce costs – but analysts said revenues at the firm needed to grow by £500m by Christmas.

Michael Hewson, from CMC Markets, said: ‘The problem is that they have a negative annual cash flow of £300m.

‘If they can get towards the end of the year and increase the amount of money coming into the business by around £500m they should be okay.

‘They low-balled an awful lot of bid work and now they are finding they can’t make any money out of it.’

Carillion, which has around 43,000 staff worldwide, will overhaul its 28,000-member pension scheme to cut its £587m deficit by £80m. The firm plans to reduce it by a further £120m by switching increases to the lower consumer prices index from the retail prices index.

The builder also has plans to save £75m in costs over the next two years, with thousands of jobs at risk – though only 340 have been axed so far.

Chief executive Keith Cochrane said: ‘Inevitably there will be further job reductions, but it is not something I can put a number on right now. No one is in any doubt of the challenge that lies ahead.’ Earlier this week the Mail revealed that Carillion was expected to hold takeover talks with a Middle East investment company following reports that the firm wanted to sell its operations there.

It now expects to raise up to £300m by selling its Canadian arm and its UK healthcare business.

Carillion is a major Government supplier, with a number of longterm contracts, including work on HS2. A Government spokesman said it was aware of the company’s plans and was awaiting further updates.

July’s profit shock saw chief executive Richard Howson step down as the group said it would need to bolster its balance sheet and was struggling to stay within its borrowing limits. Since then it has parted ways with its finance director and announced a raft of senior management changes.

Full-year net debt is forecast to come in at between £825m and £850m.