May Gurney hit by profit warning, CEO goes
(Reuters) - Infrastructure and maintenance firm May Gurney Integrated Services Plc (MAYG.L) issued a profit warning and said its chief executive of four years would leave the company immediately, sending its shares down more than 40 percent.
The company, which helps maintain Britain's roads, rail and utilities services, said it would "significantly" underperform its original expectations for the year.
It cited "serious" but unspecified operational issues related to the closure of its facility services unit and weakness at its waste recycling business for the warning.
"The board has moved swiftly to deal with the specific operational problems that have emerged over the last few months," Chairman Baroness Ford said in a statement.
May Gurney said CEO Philip Fellowes-Prynne would leave immediately and named Willie MacDiarmid, a non-executive director, as an interim replacement.
The company makes 60 percent of its revenue from the public sector and is hoping that a government spending review by the end of the year will result in more business being sent its way.
In March, the company said its facility services segment, which caters to local authorities involved in the education sector, was underperforming, partly due to supplier issues, and that it would consider closing the business. Shares in the company have lost a fifth of their value since then.
The company, which said on Thursday that it expects to "significantly" under-perform its original expectations for the year, will take a one-off charge of 10 million pounds ($15.91 million) at end of the year related to the run-down of the business.
"The exceptional exit cost for facility services is higher than expected," said N+1 Brewin analyst Mark Fleetwood.
As of June, the segment accounted for about 7 percent of the company's turnover.
"The AGM statement in late July (24th July) stated that trading was broadly in line with expectations so today's profit warning raises fears on the outlook going forward," said Northland Capital Partners Ltd analyst Andy Hanson.
The company also said target margins had not been achieved for contracts related to its MaGos business, which provides waste and recycling services.
Shares in the company were down 43 percent at 125.45 pence at 0853 GMT on the London Stock Exchange.
($1 = 0.6284 British pounds)
(Reporting By Shilpa Hinduja in Bangalore; Editing by Saumyadeb Chakrabarty)
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