Housebuilding, construction and regeneration firm Galliford Try (GFRD) is successful in getting investors to focus on the positives from today’s first quarter trading update.
It advances 4.2% to 868.5p despite the ongoing negative impact from the Aberdeen Western Peripheral Route joint venture.
Historically, like several of its peers Galliford was drawn into securing work at a fixed price while underestimating the financial demands. This type of growth-at-all-costs approach has left a bitter legacy for shareholders.
Galliford argues these failings are now behind it and is keen to tell the story of its relatively buoyant Linden Homes housebuilding arm and its regeneration division.
It will have the opportunity to do so in more detail at an upcoming investor day on 11 October.
FLY IN THE OINTMENT
AJ Bell investment director Russ Mould says: ‘There is a rather big fly in the ointment for builder Galliford Try in its full-year trading statement.
‘The construction division has swung from a comfortable net cash position into the red thanks to costs associated with the Aberdeen Western Peripheral Route (AWPR) joint venture.
‘Partnered on this troubled road development with Balfour Beatty and the now defunct Carillion, both Galliford and Balfour have had to take on extra costs since Carillion's collapse.
‘In contrast, Galliford's regeneration arm and its Linden Homes housebuilding business are performing very nicely. Linden delivered sales growth in line with expectations and improved profitability.
‘Investors must hope AWPR is the last of several troublesome legacy construction projects and the company at least has the controls in place now to avoid the large scale, fixed price contracts thathave been the problem in the past.’
