Building support services firm Carillion PLC (LON: CLLN) has cautioned that the pace of new orders has slowed in the second half, partly due to a spending delay by the government following June’s Brexit vote.
The group, which maintains railways, roads and military bases, said it expected the value of orders and probable orders won in the six months ending December 31 to be lower than the £2.5billion worth garnered in the first six months of the year.
Carillion said it believed the slowdown was caused by the time being taken to reassess its spending priorities ahead of its November’s Autumn Statement.
The group also said there had been a slower pace of contract awards from the Middle East, particularly in Oman, as the region grapples with low oil prices.
However, Carillion said its overall performance is meeting expectations.
It added: “Given the strength of our order book, framework contracts and pipeline of contract opportunities, we believe we are well positioned to make further progress in 2017.”
Carillion's said its 2016 new and probable orders pipeline was expected to reach £4.5billion, taking its total and probable orders pipeline to about £16billion by the year end. But that is lower than the company's forecast of about £17.4billion.
Analysts at Liberum Capital said: ”‘Support Services is performing well and margins ahead, due to £20m one-off.
“ME (Middle East) flat volumes, but weak margins, and we have concerns about the medium term. Construction Services margin is likely to end the year at the top of the 2.5-3.0% target range.”
In a note to clients, the Liberum analysts cut their share price target for Carillion to 200p from 250p, and retained a hold rating on the stock.
In early morning trading, Carillion shares were down 1%, or 2.6p to 253.5p.