Renew’s Specialist Building division – already downsized by 14% last autumn – is to suffer a further trimming back so that total capacity will be down by 37% in total.
A spokesman would not say how many jobs are involved.
Renew will take a ВЈ2.5m hit to cover the latest redundancy and restructuring costs.
There will be a further ВЈ1m hit in an attempt to settle legacy contracts containing unresolved issues.
A previous bout of downsizing five months ago triggered a ВЈ1.5m cost.
Renew told the Stock Exchange that it will fail to deliver the profits this financial year in line what was expected.
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Brian May, chief executive, said: “Results for the first half of the year are expected to be satisfactory, however the outlook has deteriorated and as a result the board does not now expect the group’s results to meet full year market expectations.”
The last two months have been challenging in Renew’s Specialist Building operation, the result being project cancellations and deferrals “leading to reduced trading expectations for the second half of this financial year”
May continued: “As a result of these weaker market conditions, the board is acting to reduce capacity in this business stream by a further 23%, giving a reduction of 37% over the last year.”
Jobs will go progressively through the second half of the year.
After spending another £2.5m on redundancy and other restructuring costs, “the resultant savings in annual costs will be more than £7m”
What work is still left will give only smaller operating margins.
In Renew’s Specialist Engineering division, the group’s trading update today says that the market and the forward order book remain stable with trading for the full year anticipated to be in line with market expectations.
Renew has been juggling with names and “has decided to reclassify its Rail Infrastructure business from Specialist Building into Specialist Engineering as this reflects better the nature of work performed”.
As a result, Specialist Engineering is expected to represent 40% of group turnover going forward with “operating margins remaining stable2.
C&A Pumps has integrated well since its acquisition on 1 October 2008.
Renew said: “The group has recently reached final account settlement on the last of the basket of legacy construction contracts, which were originally provided against in 2005. This has led to an exceptional charge of £1m which will be reported in the first half results.”
Renew’s balance sheet remains debt free.
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