The crisis at infrastructure firm Mouchel was laid bare yesterday after it posted annual losses of £65m and predicted more pain to come.
Mouchel, which provides consulting and business services on road building and other public sector projects, has been rocked by government spending cuts and under-performance in certain parts of its operation.
It secured a lifeline yesterday by agreeing amended terms on banking facilities due to expire in March 2014, but in its delayed results announcement it said expectations for the coming year were “significantly reduced”.
The company’s order book has shrunk to £1.4bn from £1.8bn a year earlier and new chief executive Grant Rumbles admitted economic conditions will squeeze margins and force clients to cut back on spending.
Mr Rumbles, who took the helm two months ago, will oversee more cost cuts and an overhaul of the company’s balance sheet but said that uncertainty over Mouchel’s financial position and recent takeover speculation had affected the company’s ability to win new business.
“The outlook for Mouchel is challenging in the short term,” he added.
Revenues were down 13 per cent to £551.4m in the year to July 31, while a string of exceptional items caused bottom-line losses to hit £64.8m, compared with a deficit of £14.7m a year earlier.
Mouchel is responsible for maintenance and operations on a substantial portion of England’s motorway and trunk road network. It also works within the Ministry of Defence and with major defence contractors such as General Dynamics, Lockheed Martin and BAE Systems.