Carillion exits PPP markets after profit shortfall

The firm has been reeling from a $1.1bn contract provision, which has sent its stock into freefall and led its chief executive to resign.

UK-based construction firm Carillion plans to exit all construction PPPs after profits in the first half of the year fell short of expectations.

The firm’s shortfall was primarily caused by the phasing of PPP equity disposals, Carillion said. A review undertaken by the board led to an unexpected contract provision of £845 million ($1.1 billion; €959 million), close to £375 million of which came from three UK PPP projects.

“Going forward, we are only going to bid for contracts under lower-risk procurement routes,” said Keith Cochran, the firm’s interim chief executive.

The crisis has caused Carillion’s stock price to plummet, falling more than 70 percent in the past week. It also led to the resignation of chief executive Richard Howson, with Cochran stepping in as an interim replacement.

Carillion, which is one of the UK’s largest construction firms, had been active in the PPP space – its experience includes around 65 such projects globally, according to the firm’s website, spanning healthcare, schools and road and rail projects. Previous PPP deals include the Midland Metropolitan Hospital in the West Midlands and a plan to build six education facilities in Ireland.

The firm also announced that it will exit the Egyptian, Saudi and Qatari construction markets.