Mowlem has issued a profit warning after an internal review found that its return on work in hand would be £15m less than it had expected for the 2004 financial year.
The news comes as Barclay Mowlem, the group’s Australian business, was hit by £12m in costs after poor trading in the Australian market.
The internal review of the contractor’s large projects, which was carried out by auditor KPMG, was ordered by John Gains, Mowlem chief executive.
Gains ordered the review before handing over his responsibilities as chief executive next year.
Gains said: “Given the prevailing climate within the industry and the fact that I have decided to hand over to Simon Vivian at the end of this financial year, I wanted to ensure that we had taken a prudent view of Mowlem’s current position.”
The review has found that the group’s profits for the full year 2004 will be at “the lower end of expectations”. A Mowlem spokesperson would not reveal what contracts these were.
Mowlem reiterated that it faces £8m of one-off costs from its support services business because it terminated two loss-making contracts.
Underlying trading at the construction division is expected to be ahead of expectations but support services is likely to be below.
Mowlem shares slid 5% or 10.5p to 182.5p on the news.