Shares in Galliford Try suffered a significant 19% drop on trading today after the builder said it was planning to review and scale back its main construction arm which would lead to a consequential fall in 2019 profit.
Galliford bosses say they are reviewing its construction business to concentrate on the firm’s “key strengths in markets and sectors with sustainable prospects for profitability and growth”. The move is expected to hit the company’s 2019 profits by up to £40m.
The company plans to review its construction work across the business, with a significant part of that being work on the Queensferry Crossing in Scotland, which only recently increased its estimated final project costs. Galliford Try say that its position on an outstanding claim in connection with the troubled recently completed Aberdeen bypass contract is unchanged. The group was hit last year when one of its partners on the Aberdeen bypass, Carillion, collapsed, leaving Galliford with extra costs of £38m.
In a statement, Galliford sought to reassure the market saying: “The majority of our construction businesses continue to perform well and these adjustments are not expected to have a significant impact on the Group's previous guidance on average net debt for the year.” However, this didn’t stop the firm’s shares plunging on the opening of trading today.
Galliford Try has played a major role in delivering some of the UK’s most high profile and innovative schemes, including the Queensferry Crossing, the retractable roof at Wimbledon centre court, several major hospitals and numerous road and housing schemes.
In its statement, the company said it would have the results of its review ready in the next few weeks and would "share the detail of the review", along with a further update on group trading, in its scheduled statement on 21 May 2019.