Galliford Try has confirmed that it has cut 350 jobs following a review of its construction business, as it tries to make savings to bring its operating margins up to a target of 2% by 2021.
The company announced at the start of this month that it was preparing to make the cuts, largely in Scotland where it has struggled with rising costs on Morrison Construction’s role on the £1.35bn Queensferry Crossing joint venture with Dragados, Hochtief, and American Bridge International.
It has also previously disclosed a £38m work in progress balance in respect of three contracts on the now-completed Aberdeen Western Peripheral Route (AWPR).
In a trading update issued today, covering 1 January to 20 May 2019, Galliford Try said it would concentrate on its building, water and highways operations (having already ceased bidding on fixed-price major contracts in 2016).
The change in focus and the corresponding job cuts mean that the restructured business is now targeting a reduced annual revenue of £1.3bn. It is expected to save £15m a year as a result of the move.
Meanwhile, the contractor expects to take a £40m hit this financial year in respect of the restructuring costs and legacy and current projects, including the AWPR.
Its current order book stands at £3bn, down from £3.3bn in 2018, with 78% of next year’s revenue secured.
Chief executive Graham Prothero said: “We have made some difficult decisions in response to the challenges faced by the group’s construction business. The associated operational changes are being implemented across the business. We are confident that the decision to refocus our construction activities will deliver a more stable business for the future and support improved margins.
“Our balance sheet remains strong, with guidance for average net debt for the full year unchanged.
“Despite the ongoing macro-economic and political uncertainty, housing demand continues to be supported by a strong mortgage market, and by Help to Buy. Linden Homes continues to see a steady sales rate and to deliver operational improvements, and we are delighted with the continued strong progress of our Partnerships & Regeneration business.”
