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Billington warns of increased losses

18 Nov 11 Unexpected contractual issues have led structural steel company Billington to predict losses that will be greater than its original expectations.

Revenues for the year ending 31 December 2011 will remain broadly in line with original estimates.

The losses have been caused by unexpected contractual difficulties that have been experienced on a small number of projects, it said. It has made management changes to enhance the efficiency and effectiveness of its supply chain.

Billington's framework contracts have also experienced a slowdown in the second half of the year although an upturn is currently anticipated in 2012.

Apart from these contractual issues, the directors said that they believe the business continues to perform well in the current depressed market; the new business pipeline appears robust although margins continue to be under pressure. Subsidiary companies and trading divisions - easi-edge, hoard-it, and Tubecon - are trading well, according to Billington.

A focus on costs has resulted in the closure of its Bristol office. Some production staff were made redundant in October 2011. The redundancy cost incurred over the current year is approximately £400,000 with an expected annual saving of approximately £1.5m. Cost savings have also been made following redundancies and reorganisation at senior management level.

Billington Holdings chief executive Steve Fareham said: “The trading update is disappointing, but has been caused by isolated issues in a small number of contracts and we have acted to reduce the risk of any recurrences.

"Our new business pipeline is encouraging and gives us confidence about our performance in 2012."

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