Interserve’s UK construction arm slumps into the red
THE chief executive of support services group Interserve has insisted that its construction division is on a stable footing, despite scaling back its activities to focus on core markets and booking a £2m loss so far this year.
Adrian Ringrose said that the division would be a “smaller business in the next few years”, following slower trading in the UK.
The latest figures revealed that Interserve’s UK construction arm made a £2m loss in the first six months of the year, compared with a £4.5m profit a year ago, which the business blamed on “underperformance on a small number of contracts and the continuation of tough market conditions”. Its future workload fell by £200m, due to a move to focus on projects with an average value of less than £10m, it said.
Mr Ringrose added: “[The construction division has] been very successful over many years, and the last couple of years have been the exception.”
He said the firm was not about to experience the same problems seen elsewhere in the sector. “Compared to some, our problems are rather more narrowly defined and controllable,” he said. Rival Carillion has suffered in recent weeks amid profit warnings and extra costs associated with some large contracts.
Interserve’s UK support services work also suffered due to costs associated with new regulations and a hiatus in government procurement after the Brexit referendum. Mr Ringrose, who will step down from his role on Sept 1, said he expected a better performance from both divisions in the second half.
Overall, revenues inched up 0.9pc to £1.65bn during the first six months of the year, while statutory pre-tax profits rose to £24.9m, from a loss of £33.8m in the same period last year.
Shares in Interserve fell 1.5pc to close at 200p yesterday.