ISG has revealed that it spoke too soon when it said it had resolved its construction problems.
The UK Construction division made an operating loss of £18.1m in the year to 30th June 2015 on £446m revenues. When that result was announced in September, CEO David Lawther said: “We believe that the poor performance and painful restructuring of the UK Construction division is now behind us, and with the outlook for most of our key markets remaining strong, we expect a much improved overall performance for the group in the year ahead.”
However, it a trading update today, just three months on, that optimism has dissipated.
The board said: “We continue to work on the recovery plan for UK Construction. Despite the many positive steps we have taken, we have continued to experience disappointing project outcomes on some older contracts. In addition, with margin and risk control remaining our priority rather than volume and some customers delaying the start on site of their projects, volumes this year will be below our expectations with profit deferred to later periods. As a consequence, this division will be loss making this year and will impact the group results by up to £5m.”
All other divisions are trading in line with expectations.