Shares in crisis-hit construction and support services company Interserve have plunged by nearly two fifths after it issued a fresh profit warning.
The group – which employs 80,000 people around the world and has a raft of key contracts from cleaning to school meals – said trading had seen a slowdown in the third quarter.
It said second half profits were on course to be half the level of last year and that there was a realistic prospect it could fail to meet a debt-to-earnings test in its financial covenants with lenders.
Interserve admitted earlier in the week that it was in discussions with its lenders – after Sky News revealed that the banks had drafted in advisers amid growing fears about the state of its finances.
The profit warning follows an earlier alert last month which saw shares halve and the latest update saw a plunge of as much as 39% meaning they have now lost more than 80% of their value since the start of the year.
Interserve said the most recent quarter had seen employment cost pressures in its UK outsourcing business as well as challenging conditions in construction though other parts of the business including overseas operations were doing better.
Chief executive Debbie White insisted there was “considerable potential for business improvement across the company”.
She said: “My team will focus on improving our margin performance in UK support services and ensuring good contract selection in UK construction, while reducing our cost base across the country.”
Interserve’s sprawling business includes thousands of cleaners as well as building, design and maintenance contracts on sites including schools and colleges.
It also serves more than 100,000 school means every day, runs rehabilitation programmes for people leaving prison and manages the Salisbury Plain military training base on behalf of the Ministry of Defence.
Interserve is the latest outsourcing operator to be hit by a decline in Government spending and growing cost pressures.
Carillion, Mitie and Serco have all been forced to change their leadership in an effort to transform their fortunes.
Source: Sky News