Carillion Declines for Fifth Day as Investec Cuts: London Mover

Carillion Plc (CLLN), a U.K. construction and services provider, fell for a fifth straight day in London to its lowest in three months after brokerage firm Investec Securities stopped recommending that investors buy the stock.

Carillion declined 5.4 percent to 291.40 pence, its lowest price since Dec. 7. The Wolverhampton, England-based company said Feb. 27 that underlying 2012 pretax profit fell 4 percent to 214.7 million pounds ($324 million) as revenue dropped 13 percent.

“The underlying business now has to battle hard to stand still and that leaves the risks on the downside,” said Andrew Gibb, an analyst at Investec in London, who lowered his recommendation to hold from buy, in a note dated March 1. Investec cited “much lower revenue growth expectations” for the group’s Middle East business, and “uninspiring” expansion prospects for Carillion’s support services in the near-term.

Carillion Chairman Philip Rogerson said in an earnings statement last week that the company expects market conditions to remain “challenging” as the U.K. construction market shrinks and it rescales its business at home. While revenue contributions from Middle Eastern and Canadian operations were lower last year, Carillion said it expects “strong medium-term growth” from both those markets.

More than 3 million Carillion shares traded today, or 2.2 times the three-month daily average. The stock has fallen 8.1 percent this year, giving the company a market value of 1.25 billion pounds.

Canaccord Genuity Corp. analyst James Gilbert also cut his recommendation on the stock to hold from buy last week.

Carillion recorded 5.2 billion pounds in new and probable orders in 2012 and said last week it has visibility on 75 percent of revenue for this year.

To contact the reporter on this story: Finbarr Flynn in Dublin at fflynn3@bloomberg.net

To contact the editor responsible for this story: Douglas Lytle at dlytle@bloomberg.net