Carillion has made plans to downsize its solar panel business which has cost the company £10m. The decision was made after plans by the government to reduce subsidies by half as of next week.
Carillion expects that the cut of the feed-in tariff (FIT) for photovoltaic solar will result in consumer demand plummeting and has therefore put its entire Energy Services workforce of 4,500 on redundancy notice. Up to a third are expected to be let go.
The planned restructuring of Carillion Energy Services (CES) following the acquisition of Eaga has now been “extended”.
Carillion said: “Progress with the original integration of this business is well ahead of our expectations. We now propose to downsize our solar photo voltaic operations, following the government's proposed changes to Feed-in-Tariffs, and to extend the restructuring of CES to deliver a substantial further improvement in overall operational efficiency. Total cost savings are now expected to increase from £15 million per annum to £25 million per annum by the end of 2013 and the one-off cost of delivering these savings is expected to increase to £40 million, which includes a provision of up to £10 million in respect of downsizing our solar photovoltaic operations.”
Despite problems caused by the FIT, Carillion said that it remained “firmly on track to deliver strong growth in underlying profit and earnings, in line with market expectations”.
It added: “We also continue to expect to make further progress in 2012 and we remain well positioned to achieve our target to deliver substantial growth in UK support services from 2012 onwards and the medium-term growth that we announced in 2010, namely to double our revenues in the Middle East and in Canada, in each case to around £1 billion over three to five years.”