The boot was on the other foot last week as contractors suffered the dent in profits that housebuilders have become accustomed to recently.
But this week it was Alfred McAlpine’s turn to deal a blow to its contractor rivals, as it revealed an unexpected profit warning last Friday. Shares dropped 5.5% to 281.5p last week, making it the worst performer overall in the construction and building materials sector.
McAlpine surprised the City with the news that its results for the year ending 31 December 2004 would be hit by exceptional charges of £27m, caused by restructuring and reorganisation costs, as well as a recent increase in losses incurred against two contracts.
Although chief executive Ian Grice said that “underlying trading is in line with expectations” and that the company would return to double-digit growth in the next financial year, nerves faltered and shares dropped over concerns that loss-making contracts will continue to damage performance in 2005.
In the two weeks since Amec relisted as a support services company, its shares have fallen 6% to 299.75p.
It was a brighter picture among the housebuilders, which have been badly hit in recent weeks. Shares in most were boosted, and Berkeley was the best performer in the sector overall, up 5.1% to 735p.
At the Thames Gateway Forum last Thursday, Ken Livingstone said that the growth area had the potential to accommodate up to 120,000 homes, double the number planned by the ODPM.
All very encouraging for the sector, and overall, the performance of the housebuilders, including Wimpey which rose 3.2% to 368p, helped push constructions shares up slightly to 2941, whereas the All-Share remained flat at 2368.
Angela Monaghan is business editor