Increasing cost pressures and challenging market conditions continue to plague the group.
Companies: Interserve Plc
Interserve (LON: IRV) has this morning announced its second profit warning in as many months, causing the stock to continue its downward spiral to reach an all-time low of 67p.
The Group's share price has been a downward trajectory since January 2015, with today's news that H2 profit will be half that of the same period adding salt to the wound. shareholders.
Its share price fell 25% in early morning trading off the back of the profit warning.
Management has reiterated the woes plaguing the Group, including contract mobilisation costs, continued employment costs and margin erosion caused by poor contract performance.
Management said:
"We now expect operating profit for the overall group in the second half to be approximately half the level of that which was reported in the second half of last year."
Today's announcement comes a month after Management announced its summer trading was poor and that the cost of the Group's exited Energy From Waste business would "significantly exceed" its stated £160m bill, causing the stock to dive 50%.
Management confirmed today that those extra costs associated with Energy From Waste would total £35m.
It first warned of the spiralling costs associated with its waste contracts six months ago, which caused a third of its share priced to be swiped.
The Group has enlisted the help of a financial advisor to assist with discussions with its lenders, while also initiating a "comprehensive contract review across both the support services and construction businesses".
Interserve CEO Debbie White commented:
"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 company."
Before today's crash, the Group already traded at a PE multiple of just 1.75, compared to the industry median of 14x.
