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[BENGALURU] The chief executive of Britain's Carillion quit on Monday as the building and support services group warned on full-year profit and said it planed to pull out of three construction markets in the Middle East.
Carillion shares lost a third of their value to trade at 129p by 0800 GMT, having earlier hit their lowest level since April 2003.
The firm, which helps maintain British railways and roads, said a deterioration in cash flows on some construction contracts had forced it take a provision of £845 million (S$1.5 billion).
The company said to conserve cash and cut debt it had decided to suspend dividends for 2017 - saving it £80 million - and would exit its UK partnership contracts as well as construction work in Qatar, Saudi Arabia and Egypt.
Announcing that Chief Executive Richard Howson was stepping down, Carillion appointed non-executive director Keith Cochrane as interim CEO. Cochrane is a former boss of Scottish engineering company Weir Group.
The British government works closely with companies such as Carillion to help secure overseas international contracts to boost trade.
Last week the government announced that UK Export Finance (UKEF) will provide US$180 million to Carillion to design and build the latest phase of "One Central", Dubai World Trade Centre's new development in Dubai's central business district.
Carillion shares were among the most heavily shorted across the British market with hedge funds including Marshall Wace and Naya Capital reporting sizeable bets on them falling, according to FCA disclosure data.
Jefferies analysts, who have a hold rating on Carillion's stock, said they expected the firm to raise cash later in the year as it grapples with cash flow problems.
Three partnership projects in Britain accounted for £375 million of the provision, but the bulk related to markets in the Middle East and Canada, it said, forecasting future cash outflows of £100 million to £150 million for the contracts.
The problems at Carillion have echoes of those at Balfour Beatty, the UK construction peer that Carillion had previously tried to take over.
Balfour spent two years overhauling its operations after work undertaken at lower margins led to multiple profit warnings that forced it to scrap its 2015 dividend, among other measures.
Carillion said its issues had been due to new work being delayed despite tenders being accepted, its dependency on partners for certain contracts and design changes undertaken without considering cost implications.
The firm had previously pointed to slower business wins in the Middle East, as spending in the region adapts to lower oil prices, and had also experiences some delays in UK public spending decisions since Britain voted to leave the European Union.
Carillion said on Monday it would only take on future construction work on a highly selective basis and via lower-risk procurement routes.
The firm had launched a review of its business and capital structure, with all options under consideration, it added.
"We are not sure that Carillion has the funds to restructure," Liberum analysts wrote, putting their recommendation under review.
The firm now expects revenue of £4.8 billion to £5 billion for 2017, it said, down from £5.2 billion in 2016 and lower than a market consensus of £5.03 billion.
Its overall performance was expected to be below management's previous expectations.