Struggling construction company Carillion slumps further with £1.5bn loss
Troubled construction company Carillion's shares have fallen by a fifth following its report of continued losses and increased debt over the past six months. The firm is seeking pivotal methods of stabilising its cash flow, including amending pension payments, which could generate a predicted £80m.
The struggling business revealed a loss of £1.15bn in the past half a year and its market capitalisation is down by almost 80%. This is in addition to the reported £845m loss from the first half of the year. In July, executives began to implement stabilisation methods, including cutting superfluous costs, amending its pension plan and taking on additional funding.
More positively, Carillion has continued to win contracts in the past two quarters, despite increasing concerns regarding its profitability and tradeability. It is expected that the company's net debt for 2017-18 will fall between £825m and £850m.
Pensions to be cut further
In order to minimise potential losses, Keith Cochrane, Carillion's CEO, has addressed the need for a change of culture. He hopes to make £75m of cost-cutting by 2019 and to rid discretionary increases in pension payments, reducing the firm's pension deficit by £80m.
He also intends to save a further £120m by basing future increases on the Consumer Price Index (CPI) instead of the Retail Price Index (RPI). The CPI's measurements normally result in a lower figure for inflation than the RPI's, making it less expensive to track. Finally, it has been suggested that Carillion will exit its Middle Eastern operations and focus on its initial markets, which could help to raise around £300m.
A government spokesman said, "Carillion is a major supplier to the government, with a number of long-term contracts. The company has kept us informed of the steps it is taking to restructure the business. We remain supportive of their ongoing discussions with their stakeholders and await future updates on their progress."
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