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Carillion fallout knocks Balfour, Galliford and Speedy

Carillion fallout knocks Balfour, Galliford and Speedy

Shares in Balfour Beatty and Galliford Try have fallen as the construction groups outlined the impact of Carillion's collapse on their joint ventures with the failed engineering group.

Balfour Beatty (BALF) was down 2.7% at 299.3p after the infrastructure group said it would take a hit of up to £45 million this year due to Carillion's (CLLN) collapse.

The group is a joint venture partner with Carillion on three projects: the Aberdeen Western Peripheral Route, the A14 in Cambridgeshire and the M60 junction 8 to junction 20 scheme.

'The cash impact to Balfour Beatty is likely to be an outflow in the range £35 million to £45 million in 2018,' the company said in a statement to the market.

'The profit impact of Carillion's compulsory liquidation would be recorded as an exceptional non-underlying charge in the income statement.'

Shares in Galliford Try (GFRD) meanwhile dropped 2.7% at £12.43. The house builder and construction group is the third joint venture partner on the Aberdeen Western Peripheral Route.

'The terms of the contract are such that the remaining joint venture members, Balfour Beatty and Galliford Try, are obliged to complete the contract,' it said.

'Our current estimate of the additional cash contribution outstanding from Carillion to complete the project is £60 million to £80 million, of which any shortfall will be funded equally between the joint venture members.

'The companies will discuss the position urgently with the official receiver of Carillion and Transport Scotland, to minimise any impact on the project.'

Speedy Hire slumps

Shares in Speedy Hire (SDY), the tool hire group which numbered Carillion as among its biggest customers, were also down heavily, falling 6.3% to 56.4p.

But Liberum, the company's broker, said the sell-off was 'overdone'. 

'As one of Speedy's largest clients, the announcement by Carillion that it has entered into compulsory liquidation is a short-term headwind for the shares,' said analyst Rahim Karim.

'However, despite the potential write-down of receivables that will result, we believe that the long-term impact on financials will be limited.

'This reflects the likelihood of joint venture partners or other third parties taking on much of Carillion's workload, as well as the flexibility within Speedy's own operations.'

Shares in some of Carillion's former rivals rose, as investors anticipated anticipating they could pick up more contracts as a result of the company's demise.

Serco (SRP) was up 5% at 103.1p. 'In December acquired £90 million of Carillion's £150 million healthcare assets. There may now be an opportunity for Serco to acquire the remaining healthcare assets, or indeed other assets,' said Karim.

Interserve (IRV) meanwhile rose 3.2% to 121.3p. 

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