Galliford Try shares hit by construction profit warning

Shares in construction firm Galliford Try have tumbled after the firm issued a profit warning.

The firm said it would undertake a strategic review that will reduce the size of the construction business to focus on its key strengths.

The process is expected to result in reduced profitability in the current year, as part of the assessment of operational progress and contracts.

It is anticipated that the outcome of the assessment will reduce the group’s full-year profit before tax by between £30 million and £40 million.

Analysts had expected £156 million for the full year, but this could now be reduced to as low as £116 million.

Shares in the company were down 20% on Tuesday morning.

The single largest element in the one-off costs relates to the Queensferry Crossing joint venture, after an estimate for final costs on the project was increased.

Further details of the plans are set to be released alongside a trading update on May 21.

It comes just a few weeks after Crest Nicholson poached Galliford’s chief executive Peter Truscott. Shares dipped on the announcement of his departure.

He was replaced by former finance boss Graham Prothero.

Analysts at Peel Hunt cut their rating on the stock, due to “continued uncertainty” over performance, size and future of the construction business with the possibility of further disappointments on large contracts factored in.