 sunk over 30 percent on Monday, after investor suspicions that it was in financial difficulty were confirmed by a profit warning.){kind=link}
Shares in support services company Carillion (LON:CLLN) sunk over 30 percent on Monday, after investor suspicions that it was in financial difficulty were confirmed by a profit warning.
Carillion confirmed that its chief executive Richard Howson would be stepping down, after lowering its financial forecasts for the year. The company lowered its revenue guidance to between £4.8 billion and £5 billion from a previous estimate of just over £5 billion and suspended its dividend for 2017. The move is expected to provide a cash saving of £80 million.
Carillion blamed “difficult” markets and withdrawals from certain territories, including Qatar, the Kingdom of Saudi Arabia and Egypt, for the hit to profits, but hedge funds have had doubts over the company’s financial viability for some time. Monday’s announcement appeared to prove them right, sending shares down over 30 percent in morning trading.
Keith Cochrane has been appointed as Interim Group Chief Executive, while a search is undertaken for a permanent appointee to replace Howson. Cochrane was previously chief executive of Weir Group, previously holding positions at Arthur Andersen and Stagecoach.
Monday’s announcement earned Carillion a downgrade from financial analysts Liberum, who changed their recommendation on the stock to ‘not rated’ from ‘hold’. Liberum raised their average net debt estimate to £800 million from £575 million, saying:
“Given the weaker profits, higher debt, need for restructuring, limited proceeds from disposals and working capital unwind in Construction, we believe that Carillion will need to raise a significant amount of more money.”
Shares in Carillion are currently trading down 31.3 percent at 132.20 (1018GMT).