Carillion chief executive Richard Howson has stepped down, as it announces it is quitting some Middle East countries and scaling back construction contracts.
It has warned that for the full year “overall performance (is) expected to be below management’s previous expectations.”
The company is also undertaking a “comprehensive review” of the business, which will see it exit from construction PPP projects, exit from the Middle East markets of Qatar, Saudi Arabia and Egypt and look at future construction contracts on a “highly selective” basis, preferring those which are done via low risk procurement. It is also selling half of its economic interest in its Oman business, Carillion Alawi, for £12.8M.
The first half year figures show revenue similar to last year at around £2.5bn.
However operating profits have been hit because of PPP equity, which is now expected in the second half of the year.
Non-executive chairman Philip Green said: “Despite making progress against the strategic priorities we set out in our 2016 results announcement in March, average net borrowing has increased above the level we expected, which means that we will no longer be able to meet our target of reducing leverage for the full year.
“We have therefore concluded that we must take immediate action to accelerate the reduction in average net borrowing and are announcing a comprehensive programme of measures to address that, aimed at generating significant cashflow in the short-term.
“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. We will update the market on the progress of the review at our interim results in September.”
The firm has announced that Keith Cochrane, formerly a senior independent non-executive director is to take over as interim group chief executive with immediate effect, while the search starts for a new boss. Howson will stay on for a year to help the transition.