Carillion appoints Big Four firm to help kickstart its response to catastrophic week
Carillion has begun its response to a catastrophic week by appointing advisers EY to support its strategic review with a particular focus upon cost reduction and cash collection.
The construction group issued a profit warning last Monday and chief executive Richard Howson departed, while it launched a major review of the business.
The Wolverhampton-based group has already said it was “taking immediate action to generate significant cashflow in the short term and achieve a reduction in average net borrowing”.
Keith Cochrane, Carillion’s interim chief executive, said: “We are moving forward quickly with the actions outlined last week.
“Alongside our own efforts, EY will provide support across the business and bring an external perspective to our cost reduction and cash collection challenge. My priorities are to reduce the group’s net debt and create a balance sheet that will support Carillion going forward.”
It has received some good news this morning, with its CEK joint venture partnership being the successful bidder for two HS2 contracts worth a total of £1.34bn.
Investors took fright last week, having long held concerns about the group’s robustness.
For some time it had been the most shorted stock on the FTSE 350 – meaning investors were betting that its share price would fall – and last week that happened dramatically. Its share price fell from 192p on July 7 to below 50p, wiping around £600m off its market value.
Cochrane added: “We need to simplify the business and demonstrate that value can again be created for shareholders by focusing the Group on its core markets, including infrastructure and property services, in which it has good strengths and leading positions.”