Up to 350 jobs are being axed at builder Galliford Try amid an overhaul of its under-pressure construction business.
The job losses largely relate to the firm’s decision late last month to close its Scottish infrastructure division as it looks to reduce and refocus the construction business on building, water and highways.
The shake-up – which follows a review launched by new boss Graham Prothero – will see the construction division’s annual sales drop to around £1.3 billion, but will deliver yearly cost savings of up to £15 million.
The Linden Homes owner reiterated that the changes will hit profits in the construction arm, leading to a write-down of about £40 million.
It comes after Galliford sent shares plummeting by a fifth last month after it warned over profits as a result of the construction turnaround plan.
But shares lifted 10% on Tuesday as investors cheered action to turn around its fortunes.
Mr Prothero, who took on the top job in March, said: “We have made some difficult decisions in response to the challenges faced by the group’s construction business.
“The associated operational changes are being implemented across the business.
“We are confident that the decision to refocus our construction activities will deliver a more stable business for the future and support improved margins.”
Galliford – which is headquartered in Uxbridge, West London – said the order book for its construction arm stood at £3 billion as at May 17 and added its Linden Homes and Partnerships & Regeneration units were performing well.
Linden Homes said its sales rate edged lower to 0.68 since the beginning of the year, down from from 0.71 a year earlier, with “stable” market conditions.
Galliford’s profit alert in April saw the group warn of a large one-off cost relating to the Queensferry Crossing joint venture, after an estimate for final costs on the project was increased.
Mr Prothero – the group’s former finance boss – took the helm after Crest Nicholson poached Galliford’s former chief executive Peter Truscott.
Charlie Campbell, an analyst at Liberum, said: “Galliford’s trading update should be taken well because there are no further incremental contract issues, and because part of the exceptional cost identified in April has a payback through future cost reduction.”