Galliford Try raised the prospect of job losses in April when it launched a review of its construction business.
The strategy rethinks came as the firm warned that its annual profits this will be £30m to £40m down on previous expectations due to restructuring costs and additional provisions for loss making contracts. [See our previous report here.]
In a further trading update today, Galliford Try confirmed that the restructure was going ahead “to simplify the business and management structure and to refocus on key strengths in markets and sectors with long-term growth and profitability potential”.
Galliford Try Construction will now concentrate on just three sectors: building, water and highways. It already opted out of bidding on fixed-price major projects in 2016.
The restructured business's target annual revenue will reduce from last year’s £1.7bn to approximately £1.3bn, generating anticipated cost savings of up to £15m a year by 2021 in a quest for operating margins of 2% by that same year.
As a result of this, up to 350 personnel will be laid off across the UK.
Chief executive Graham Prothero initiated the strategy review after stepping up from financial director in March on the departure of Peter Truscott. He 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.”