ISG’s construction arm has been hit by a fresh profit warning, just months after it revealed significant losses in its last full-year financial results.
In a statement to the City this morning, the fit-out specialist said it expected to take a £5m hit in this year’s results after describing trading in UK construction as “disappointing”.
ISG blamed the losses on poorly performing legacy contracts, but said it expected “the vast majority of outstanding commercial issues” to be settled by the end of the financial year.
In the trading update, the company said: “We continue to work on the recovery plan for UK construction.
“Despite the many positive steps we have taken, we have continued to experience disappointing project outcomes on some older contracts.
“In addition, with margin and risk control remaining our priority rather than volume and some customers delaying the start on site of their projects, volumes this year will be below our expectations, with profit deferred to later periods.
“As a consequence, this division will be loss-making this year and will impact the group results by up to £5m. The board is resolute in its ambition to refocus this division on core sectors, regions and skills.”
In September, ISG revealed a £27.8m loss for the 2014/15 financial year, with the UK construction arm responsible for an £18.1m loss. The results followed a profit warning issued in February.
At the time, the group said its problem contracts had “largely been closed out”.
ISG shares plummeted in the immediate aftermath of today’s profit warning, losing 15 per cent of their value in the first half hour of trading.
Despite the warning, the group’s total order book at the end of October stood at £1.13bn, 12 per cent up on the same time in 2014.
The group said it was working on six major London office fit-out schemes, worth a combined total of £300m.
ISG will reveal its interim results for the six months to 31 December 2015 on 8 March 2016.