Interserve shed almost half its market value on Thursday morning after it became the latest British outsourcing group to warn on profits amid economic uncertainty and weak government spending.
The company said trading over the summer was “disappointing” in both its support services and construction divisions, meaning full-year profits will be “significantly below” previous expectations.
On top of the disappointing recent trading, costs related to its troublesome waste contracts have continued to spiral. The company swung to a loss last year and was forced to suspend its dividend in February due to costs related to its “energy from waste” business. Interserve announced it would stop building the plants more than a year ago, but has repeatedly had to raise its forecasts for how much exiting the business will cost.
On Thursday it said it is likely “the final costs will significantly exceed the £160m currently provided”.
The company said it will provide a further update “in due course”, but stressed that it expects to be able to operate within its banking covenants for the rest of the year.
Interserve is only the latest in a string of outsourcers to run into trouble in recent years. Years of government spending cuts have been exacerbated by uncertainty in the wake of last year’s Brexit vote, which led some companies to delay new projects and contracts.
Shares in Interserve fell as much as 52 per cent in early trading to an all-time low of 73p, and at publication time were down 47 per cent to 80p