Belfast Telegraph

Troubled Carillion sees shares tumble for a third day

Construction and infrastructure giant Carillion saw a third day of tumbling shares wipe nearly two-thirds off its stock market value amid worries over its future.

Shares in t he troubled group plunged another 12.7% at one stage after tanking by 40% on Monday and a further 30% on Tuesday after it warned over earnings and revealed an £845 million write-off on construction contracts.

C hief executive Richard Howson stepped down with immediate effect on Monday as the group said it would need to bolster its balance sheet and was struggling to stay within its borrowing limits.

He has been replaced by Keith Cochrane on an interim basis while a search is undertaken for a permanent boss.

Analysts at UBS reportedly warned on Tuesday that shares could even plummet to zero if Carillion's support services trading is hit, while other experts raised worries the group may not have the funds to restructure.

Carillion said on Monday the board is to carry out a "comprehensive review" of the business.

Monday's dire half-year trading update saw it downgrade its annual revenue guidance, with sales now expected to be between £4.8 billion and £5 billion, while its overall performance is forecast to be "below management's previous expectations".

It also said operating profit will fall short of expectations.

After a review by KPMG, the group said it will book an £854 million provision linked to certain UK and overseas contracts.

A total of £375 million relates to the UK and £470 million to markets in the Middle East and Canada.

Carillion specialises in railways and roads maintenance and has contracts with the likes of Network Rail.

It is also involved in a joint venture that will support the delivery of High Speed 2 (HS2).

The firm reported a 5% fall in pre-tax profits to £146.7 million last year and has previously said the pace of new order intakes has slowed since the Brexit vote.

The group said it had also seen some delays in UK public spending decisions following the referendum, and added that low oil prices had hit customer spending in the Middle East.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said earlier this week Carillion was " trying to bail out a supertanker with a soup spoon".

He said investors were worried a " significant rights issue could be on the horizon", given Carillion's need for restructuring and ongoing debt woes.