Shares hit as contractor admits problems at building division
Listed contractor North Midland Construction has issued a profit warning, saying it will make a loss of £0.3m for three months to September and has no prospects of profits improving before the end of the year.
In an interim management statement to the city this morning, the contractor said that its building business was being hit hard by the recent downturn in the economy, with “deterioration in the economic climate … having a significant adverse effect on certain sectors of the group’s business.”
It said it will bring in revenue of just £38.7m in the most recent quarter, and that it does “not anticipate a significant improvement in the trend rate of underlying trading performance during the final quarter.”
It said the losses, primarily related to problems in its building subsidiary, was prompting “radical restructuring” of the division. In particular it said it was experiencing delays and cost overruns on one major project, with a contractual claim over the job being pursued.
Its order book stands at £70m, down from £89m at the same period last year, which it said reflected the challenging trading environment for its building business.
While it said its highways, M&E and civil engineering businesses were performing in line with expectations, it is still writing off an exceptional £1.27m of non-cash goodwill from the balance sheet, because of the poor performance of the building division.
Shares fell 8% in early trading on the news.