As profit warnings go they don't come much worse than the one from support services outsourcer May Gurney. Management admits that full-year figures will significantly underperform expectations due to serious operational issues on rubbish collection contracts, and a further £10m exceptional costs for the closure of the facilities management division. Chief executive Philip Fellowes-Prynne has left with immediate effect. Broker Peel Hunt has downgraded its full-year profit forecasts from £30m to £25m, giving EPS of 26.2p (down from 31.5p). The broker also assumes a dividend cut.
May Gurney faces several challenges in a difficult environment, with a new chief executive. The losses on its MaGos rubbish collection contracts are a concern as these represent 3 per cent of group revenues. But perhaps more worrying is news that Scotia Gas Networks is taking previously outsourced utility work back in-house.
