Driver Group to shut loss making operations as it warns on profit growth

Engineering and construction consultancy Driver Group will be closing some Middle Eastern and APAC operations as it warned on lower-than-expected profits for the year.

The Rossendale group said it is starting an operational review following a “difficult second quarter” ending 31 March.

Trading during the period was impacted by a combination of a “problematic loss-making contract” in the APAC region and an unexpected drop in revenues in the Middle East region.

The EuAm region has continued to perform well and “provides a solid platform” to build for the future.

But it said the impact of the APAC and Middle East regions means that underlying Group profit before tax for the half year is expected to be between £300,000 and £500,000 against £1m in the corresponding period last year.

An operation review is now underway on those underperforming regions and the board has identified areas to reduce costs in excess of £1m.

This will include the closure of marginal locations and job losses.

The group said: “In addition, this reconfiguration and associated reduction in headcount is expected to result in higher utilisation allowing management to be more selective of its future client base.

“Implementation of the key findings of the review will commence immediately and is expected to support a significant improvement in profitability in the second half.”

Net cash balances currently stand at £3.9m with available bank facilities of a further £5m.

Driver Group also announced that David Kilgour has stepped down as Chief Financial Officer and will leave the Group to pursue other ventures.