Carillion will undertake a £40m restructure of its energy services business due to continued slow take-up of the Green Deal.
The contractor will restructure its energy services business during the rest of 2013 “to ensure that it is aligned in size to the markets in which it operates”.
Carillion said the restructure was due to the slow development of the Green Deal market and the delayed start to the Energy Companies Obligation, which it warned “may now be subject to further delays”.
In a statement, Carillion said it was “still assessing the extent of the restructuring required”, but expects the total cost to be £40m in 2013.
It added that cashflow is in line with previous guidance, and that borrowing at the year-end would be lower than the £270m reported in its half-year results, despite the additional cost of the restructure.
Carillion also announced it has been appointed preferred bidder by West Sussex County Council for energy-saving initiatives worth up to £100m over 10 years.
Speaking to Construction News after its six-month trading update in July, Carillion chief executive Richard Howson said the contractor was “disappointed with the slow start” of the Green Deal and said the government should “broaden support through subsidies to incentivise the early adopters”.
He admitted Carillion had invested “quite heavily” in the Green Deal and that “something has to be done in order to really kick-start the new sector”.
In its half-year results Carillion warned that the slow start to the Green Deal market and delays to the ECO were affecting its revenue expectations for its energy services business.
During H1 2013 the contractor secured energy services contracts under the Green Deal and the ECO worth around £150m.