Extensive job cuts likely as contractor blames faltering Green Deal and delays to ECO for 拢40m restructure

Carillion

Source: Alamy

Contractor Carillion has launched a major restructuring of its Energy Services Business due to the faltering Green Deal market.

The contractor said the move was due to a continued slow market for the government鈥檚 flagship Green Deal programme and its expectation that the Energy Companies Obligation (ECO), which targets works in fuel poor households, 鈥渕ay now be subject to further delays鈥�.

Carillion said in a statement this morning it was still assessing the extent of the restructuring required, but that it expected the restructuring to incur 鈥渢otal non-recurring operating charges of some 拢40m in 2013鈥�.

This charge is the same as that recorded when it laid off 1,400 people last year in its Energy Services business following the government鈥檚 decision to cut the proposed Feed In Tariff rate for domestic renewable power, giving a sense of the scale of today鈥檚 announcement.

Carillion鈥檚 Energy Services business is largely made up of Eaga, which was acquired for 拢298m in 2011.

Carillion has previously alerted the market to the 鈥渟low鈥� start to the Green Deal programme, under which government figures show just 12 households have had work completed, but this is the first time it has commented on the impact on its business.

Carillion said: 鈥淭he slow start to the whole of the Green Deal market, which, together with the delayed start to the Energy Company Obligation (ECO) market, is affecting our revenue expectations from energy services.

鈥淭he development of the Green Deal market continues to be slow and ECO may now be subject to further delays. Consequently, we will restructure this area of our business during the remainder of 2013 to ensure that it is aligned in size to the markets in which it operates.

Despite the restructure, the firm said overall profit and earnings were in line with expectations.

It revealed it had a number of major contracts, including a 拢92m contract by The Oman Hospitality Company SAOC to build the Kempinski Wave Hotel in Muscat, Oman.

In addition it said it had been named preferred bidder on a 拢100m 10-year contract with West Sussex County Council to deliver its Energy Saving Programme.

Chief executive Richard Howson said he was 鈥渄elighted鈥� Carillion had been selected on both contracts.

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