Concerns over Interserve in the wake of Carillion's collapse

Shares in Interserve have plunged following reports that the outsourcing giant has been placed under Government watch amid fears for its financial health following the collapse of Carillion.
Interserve.  Picture James Hardisty.Interserve.  Picture James Hardisty.
Interserve. Picture James Hardisty.

The group, which has revenues of around £3bn and employs 80,000 staff worldwide, was down more than 10 per cent in morning trading on the London Stock Exchange.

The Financial Times reported that ministers are “very worried” and have set up a team of officials to monitor the company.

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The FT report came after the collapse of competitor Carillion earlier this week highlighted concerns over the outsourcing sector in Britain.

The Financial Times said that civil servants had monitored the contractor since a profit warning in September due to concerns over its financial health, citing government advisers and officials.

Interserve declined to comment on the report.

In September Interserve warned of lower annual earnings, sending shares crashing by more than 50 per cent. It cost more that anticipated for the firm to exit from the waste-to-energy business, while its construction and services traded below expectations last summer.

However, a week ago Interserve said that 2018 operating profit would be ahead of forecasts, sending shares to their highest since the September profit warning.

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Neil Wilson, ETX Capital’s senior market analyst, said: “Interserve has had its problems for sure, but it’s no Carillion.

“Its latest update showed improvement and the news will do no good for sentiment given there may be some twitchiness among investors in the sector following Carillion’s collapse.

“The FT report suggests that Interserve is being monitored by the Government. While one official says ministers are ‘very worried’, another said there is ‘no comparison’ with Carillion.

“Mixed messages but hardly likely to engender confidence and we note a fairly volatile open for the stock with IRV trading down more than 8% at send time.”

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