Chief executive sets in motion major restructuring after announcing £10m loss on Nottingham tram project.
Carillion chief executive John McDonough has begun to restructure the firm after issuing a profit warning earlier this month.

McDonough has removed a layer of management from the building division and restructured and rebranded the infrastructure services division. This is to be renamed Carillion Roads and will be run by Gordon Bryden, who is presently a director of the business.

The company announced two weeks ago that it would lose £10m because of a two-month delay in the Nottingham tram project. The loss will be recorded in Carillion's six-month results to 30 June, due out in September.

A spokesperson said that the firm would avoid large infrastructure schemes. He said: "Under the new Carillion Roads brand, the company will focus on roads, maintenance and civils work. We are looking to move away from projects like Nottingham tram."

As a result of the restructuring, the managing director of Carillon Building, Martin Smout, has left the company. Martyn Palmer, the managing director of the capital projects arm, has also stepped down, although he will remain with the company to oversee the transition period. That business will be taken over by director Roddy McIver.

The Carillion building division will be divided into two regions; Tony Lenehan will operate as the managing director for the north and Alan Hope will become managing director for the south. Each will report directly to main board director Roger Robinson.

The company's capital projects division, which used to undertake large infrastructure projects, will now focus solely on developing the company's international businesses.

The Carillion spokesperson added that Robinson would take a more hands-on role.

He said: "Roger has been with the company since the takeover of Tarmac, is very experienced and will now move closer to the operation of the business."

A Carillion insider said the restructuring had been speeded up after the profit warning.

He said: "Since 2000 there has been a push to make the firm as lean as possible without losing any muscle. It seems that the senior directors are trying to get closer control of the running of the business."

The Nottingham Express Transit scheme was intended to be completed on 11 November this year, but will finish in the beginning of next year. Carillion is drafting in extra workers to accelerate completion of the scheme.

Carillion's share price slumped nearly 20p from 176.5p to 159p after the profit warning.

However, it is expected that the full-year results will be in line with last year, with a pre-tax profit of about £50m.