Galliford Try has had to set aside £98M to cover costs on two major infrastructure projects.
In a trading update the company revealed it had allocated £98M to settle two joint venture legacy projects, defined as beginning in 2014 or earlier. Around 80% of the cost relates directly to these projects.
The firm added that one of the projects will finish on site this summer while the other, which is responsible for a higher share of the costs, will end in mid-2018.
“The impact of the legacy projects in construction, in particular the two large infrastructure projects, is regrettable,” said Galliford Try chief executive Peter Truscott, adding that the company is no longer taking major infrastructure schemes on fixed price contracts.
“There are no other similarly procured major projects in our current portfolio and we are encouraged by the performance of the underlying portfolio of newer work.”
However, Trustcott stressed the firm’s confidence in a strong performance for the full year.
“Whilst we remain cautious of continuing macroeconomic uncertainty, all three businesses are focused on exciting targets and clearly defined plans to improve operating efficiency and grow both margins and revenue,” he said.
Galliford Try is part of a joint venture working on the Queensferry Crossing, which is due to open in late summer. The firm is also involved in building a 58km stretch of the A90, which will open in 2018, along with Balfour Beatty and Carillion.
The trading update covered construction performance from 1 January to 2 May this year. In a previous set of half year results, released in February, Galliford Try reported that construction margins had dipped while civils work helped it increase its half year pretax profits by 19% to £63M.