But firm says its partnerships housing arm is performing well
Galliford Try, whose Linden Homes business generated nearly £1bn in turnover last year, is to cut its activity in its construction operation by nearly a quarter as it focuses on three key areas and retreats from other markets.
Earlier this month the firm said it was reducing its construction workforce by 10% – 350 people – as a result of losses which have mounted up on problem contracting jobs including the Aberdeen bypass and Queensferry Crossing scheme near Edinburgh.
Profit at its construction operation will be hit by the impact of the review, including a writedown this year of £40m arising from the restructuring and legacy issues.
Last year the firm raised around £144m through a rights issue to cover ongoing costs from the delayed Aberdeen road job.
In a trading update issued today Galliford Try said it had now completed its review of its construction business and was set on making it smaller – including by streamlining its management structure.
In future, the division will just focus on buildings, water infrastructure and highways.
The 23% reduction in its construction arm’s revenue to £1.3bn will generate savings of £15m a year from 2021 and help push it towards a 2% margin in 2021, the group said. Last year, construction, Galliford Try’s biggest division, had revenues of £1.7bn with just over £1bn coming from buildings and the rest from infrastructure.
Elsewhere the firm said it had traded well in its third quarter, with pre-tax profit, excluding exceptional items, forecast to sit between £113m and £123m for the year ending 30 June.
The group’s Linden Homes business recorded a slight slowdown in the third quarter, in line with many of its competitors, with total sales, sales rate and average sales outlet all a touch down on the third-quarter figures from 2018.
Partnerships & Regeneration saw mixed-tenure sales reserved, completed or contracted up to £284m, from £175m at the same time last year, with the business having been recently appointed to build 850 homes as a partner to Homes England as well as deliver 725 homes as part of the first phase of the £6bn Meridian Water development in east London.
Graham Prothero, Galliford Try’s chief executive, said: “Despite the ongoing macro-economic and political uncertainty, housing demand continues to be supported by a strong mortgage market, and by Help to Buy.
“Linden Homes continues to see a steady sales rate and to deliver operational improvements, and we are delighted with the continued strong progress of our Partnerships & Regeneration business.”
Galliford Try will make a full year results trading update on 17 July.
No comments yet