Interserve is pulling back on its construction workload after it blamed challenging market conditions for a £2M loss in its UK construction business.
In its half-year results the firm also said operational underperformance on a small number of contracts contributed to the £2M loss, which was a significant drop compared to the £4.5M UK construction profit last year. As a result Interserve said it had “refined [its] risk appetite”, scaling back its construction order book and only taking on projects with a value of £10M or less.
Overall the business was back in the black with a pretax profit of £24.9M, compared to a loss of £33.8M last year due to issues with its Energy from Waste (EfW) business, which it has now sold. In February the firm said it had set aside £160M to cover the costs of quitting its EfW commitments.
Interserve chief executive Adrian Ringrose, who is stepping down at the end of the month to be replaced by Debbie White, said he expected the construction business to perform better in the second part of 2017.
“Trading in the first half of the year was mixed. In the UK, Support Services delivered robust volume but margins were impacted by a number of anticipated cost headwinds, while in construction the continuation of a long period of challenging market conditions, coupled with areas of underperformance in operational delivery, resulted in a small loss for the division,” said Ringrose.
“We expect the restructuring and cost reduction measures we have taken in recent months to benefit both divisions’ performance during the second half of the year.”