Mouchel warns on profits as state contracts are lost

Mouchel, the support services firm that is suing Westminster council over its botched £50 million parking contract, today revealed the impact of the loss of that and other public-sector contracts as it issued a profits warning.

City analysts had expected pre-tax profits for the year to come in at about £35 million. But Today Mouchel warned that profits before exceptional items will be around £30.5 million before "exceptional items".

It said one of those exceptional charges will be the £23 million cost of making more than 2,000 staff redundant since January last year.

Mouchel blamed the decline on the "challenging business environment and the likelihood that this environment may harden" as well as its decision to take a "more cautious view of the final settlement of a number of current project claims".

However, with an order book worth about £2 billion it was more upbeat about next year, anticipating major contract wins as local councils look for ways to save money and outsource contracts to do so.

"The medium and longer-term outlook is becoming increasingly positive as the new Government's policies are implemented," the highway maintenance specialist said.

Execution Noble analyst David Brockton said today's update was "a further setback for Mouchel".