Company blames coalition cuts for a £80m hit to top line this year
The share price of social housing specialist Connaught has plunged by a third on the back of a profit warning this afternoon related to the coalition government’s cuts.
In a statement to the City, it said profit would be hit by £13m and turnover would be £80m lower as a result of 31 contracts on which spending will be deferred.
It added: “If this were to continue we anticipate a reduction of revenue by £120m and EBITA by £16m for financial year 2011.”
The share price fell 33% to 215p in Friday afternoon trading.
Despite the fall, the company has insisted that the medium-term outlook remains strong and pointed to savings of £25m in 2012 as a result of its cost reduction programme.
It said: “We have a record bid pipeline of £5.3bn reflecting the trend towards larger, longer-term contracts as our customers seek to address their budgetary restrictions. Connaught is ideally placed to meet the emerging requirements of this market.”
In March this year the company was the subject of bid speculation from private equity firm 3i, which some observers said had examined the possibility of merging it with its Enterprise outsourced maintenance business.