Interserve shares plunge after profit warning
More than £100 million has been wiped off the stock market value of construction and services group Interserve this morning as its shares slumped more than 50 per cent after a profits warning today.
The company, which employs more than 1,000 people across the Black Country, said UK trading in both support services and its construction division had been 'disappointing' in July and August.
"As a result of this, the board now believes that the outturn for the year will be significantly below its previous expectations," the company warned in a statement to the City.
It also warned that the rising cost of pulling out of its 'energy from waste' business would be 'significantly' more than the £160 million already budgeted for.
"Further progress continues to be made on contracts within our exited Energy from Waste business. However, the anticipated timing and complexities of completion mean that the board now considers it likely that the final costs will significantly exceed the £160m currently provided," said Interserve.
The company swung to a loss last year and was forced to suspend its dividend in February due to costs related to the 'energy from waste' business. Interserve announced last year it would stop building the plants but has had to keep hiking estimates for how much it will cost to exit the business.
The company said it will provide a further update “in due course”, but said it believed it would be able to operate within its banking covenants for the rest of the year.
At the time of publication shares in the company had fallen to al all time low, below 72p.
The £3.7 billion a year group employs around 80,000 people worldwide. The latest profit warning comes as new chief executive Debbie White stars just her second week at the helm after taking over from former boss Adrian Ringrose.
Interserve employs 1,600 across the West Midlands and is currently completing a new regional headquarters next to Birmingham, Airport. It has around 120 working at specialist building technology firm RMD Kwikform’s two sites in Aldridge, staff at offices in West Bromwich and Dudley and another 600 working at Russells Hall Hospital as porters, cleaners, maintenance and catering staff.
Its problems mirror those of a number of other services and construction groups in recent months. Wolverhampton-based Carillion saw its shares crash and has undergone major management restructuring after revealing an £845 million hit from work on a number of building contracts.