Slow summer trading and spiralling costs are said to be the causes.
Companies: Interserve
Not good news from Interserve today as the Group sheds more than half its market value off the back of Management's profit warning.
The Group's share price hit an all time low in early trading with the news the Group's summer trading was slow in its core construction and support services.
Management went on to say:
"The Board now believes that the outturn for the year will be significantly below its previous expectations."
Exacerbating the poor performance in July and August was the news that the costs of the Group's exited "Energy From Waste" business will "significantly exceed £160m currently provided."
The bad news comes 6 months after the Group announced it would suspend its dividend due to the spiraling costs of the waste contracts, causing shares to dive 33%.
The Group said they would provide a further update in due course and that:
"The Board continues to believe that the group will be able to operate within its banking covenants for the year ended 31 December 2017."
Today's announcement is a similar story to rival Carillion who in July revealed a £845m hole in its contracts, causing a 70% share price drop in three days.
Before today's news the Group already had a low PE ratio - just 2x versus the industry medians 14x as revenues growth plateaus and operating losses grow.
