Interserve shares plunge 50pc as it issues major profit warning on spiralling costs
SHARES in Interserve halved in value in the space of a morning’s trading following a disastrous update in which the support services and construction group issued a massive profit warning on the back of spiralling costs.
Shares in the firm plunged by 51.6pc to 73.75p as the scale of the company’s troubles was laid bare.
Just last month, Adrian Ringrose, Interserve’s former chief executive, assured investors that the group’s construction division was profitable, and would scale back its activities in order to get back on track after making a £2m loss in the first six months of the year.
“Compared to some, our problems are rather more narrowly defined and controllable,” he said at the time. Mr Ringrose left his role at the beginning of this month and was replaced by former Sodexo boss Debbie White.
But the firm said yesterday that trading in July and August had been “disappointing” in both the support services and construction division, hitting its expectations for the rest of the year.
Additionally, costs for exiting a problematic energy-from-waste contract will “significantly exceed” the £160m already put aside, Interserve said.
Howard Seymour, analyst at Numis, said he expected costs to be between £15m and £30m higher.
This could dent profits this year by 25pc, he said.