Galliford shares tumbled 21.4% to 577 pence, which resulted in the undoing of a 16% gain since the start of 2019 that other profitable main businesses had brought to the group.
Galliford Try, the British construction company, recently announced that it will be reviewing its core construction business. The announcement comes on the heels of the appointment of a new CEO and a profit warning that caused Galliford shares to slide 20%.
Galliford’s projects range from redevelopment of hospitals and city bypasses to Wimbledon tennis venue. The company is however planning to reduce the construction business and intensify focus on profitable sectors.
In early trade, Galliford shares tumbled 21.4% to 577 pence, which resulted in the undoing of a 16% gain since the start of 2019 that other profitable main businesses had brought to the group.
Graham Prothero, the former finance director for Galliford recently took over the position of chief executive officer of Galliford and sources suggest the construction business review comes as a part of the new business strategy designed by Prothero.
The construction unit is reportedly Galliford’s biggest business unit contributing towards a third of sales achieved by the group. But cautious bidding and project delays had led to lower revenue garnered by the unit over the six months ended December 31.
According to sources close to the matter, Galliford will take the biggest hit to its earnings this year from its commitment to the Queensferry Crossing JV project which had an estimated cost of $1 billion. However, the company said that the project, which is one of Scotland’s biggest infrastructure projects, recently increased its estimated final costs.
Sources previously reported that according to Galliford the impending departure of Britain from the European Union is discouraging private sector clients from embarking on major projects while the same is distracting the government from construction projects as well.
Galliford now wants to focus on sectors where it already has a track record of success and markets with sustainable projections for growth and profitability.
Galliford has been reported to comment that the outcome of the review is expected to reduce pretax profit, which will be £30 million to £40 million lower than the previous forecast of £156 million, for the year ending June 30.