Former Weir chief to lead Carillion on interim basis
● News comes as company unveils ‘thorough’ review
Former Weir Group chief executive Keith Cochrane has been appointed to lead construction and support services giant Carillion while it searches for a new boss.
The move came yesterday as the group warned over its performance and said that the board is to carry out a “comprehensive review” of the business, with the firm’s chief executive stepping down.
Shares slumped in the wake of the announcement, closing down 39 per cent or 75p at 117.1p.
In a half-year trading update, Carillion downgraded its annual revenue guidance, with sales now expected to be between £4.8 billion and £5bn and its overall performance forecast to be “below management’s previous expectations”. It also cautioned that its operating profit would fall short of expectations.
Boss Richard Howson is to step down and be replaced by Cochrane, who has been on the Carillion board since July 2015, on an interim basis while a search is undertaken for a permanent replacement.
Cochrane, who has also led Scottish transport giant Stagecoach, left the top job at Glasgow-headquartered Weir last year, when he was replaced by Jon Stanton.
Following a review carried out by KPMG, Carillion said it will book an £854 million provision linked to certain UK and overseas contracts.
Philip Green, the firm’s nonexecutive chairman, said that the action was needed to reduce borrowings.
“We must take immediate action to accelerate the reduction in average net borrowing andareannouncingacomprehensive programme of measures to address that, aimed at generating significant cashflow in the short-term,” he told investors.
“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.”
The group reported a 5 per cent fall in pre-tax profits to £146.7m last year and has previously said the pace of new order intakes has slowed since the Brexit vote.
Nicholas Hyett, equity analyst at financial servies outfit Hargreaves Lansdown, said: “Carillion looks like it’s trying to bail out a supertanker with a soup spoon. Despite the group’s best efforts, debt is continuing to climb, and at an increasing rate, while the construction business seems to be hitting one hurdle after another.” More than 300 Scots could be set for a new life Down Under, with Glasgow-based Primestaff kicking off a recruitment drive on behalf of one of New Zealand’s top civil engineering firms. What has been described as an “explosive demand” for construction workers has created an opportunity for hundreds of jobs in the country. Construction head Michael Docherty said: “It’s clear that the demand doesn’t end here, it’s a very interesting time for the construction sector.”