Rok in a hard place - 750 jobs axed

Rok is to axe 15% of its workforce in a dramatic move which means that around 750 jobs could disappear, predominantly in white collar roles.

Rok finds itself under pressure to make annual cost savings of £20m on top of the £10m already removed

The latest move accelerates the group’s plan to put greater focus on maintenance and repairs and less on contracting. 

The change in business mix will also further reduce the risk profile.

In a trading update this morning, Rok said the market had changed dramatically.

Activities continue to trade well but since the beginning of October there has been a significant deterioration in contracting, small building works and social housing operations from both private and public sector clients.

Committed projects totaling in excess of £150m have been cancelled or deferred as customers have been unable or unwilling to access cash linked to the current banking sector crisis.

Some 50 projects across all geographic regions have been impacted with some £30m in general construction, £15m in social housing refurbishment, £17m in private housing and £12m in social housing new build. 

In addition, Rok is turning away a significant amount of business where customers are unable to provide concrete evidence of their ability to pay or where we consider the margins to be unviable.   

Overall, turnover will be £120m lower than expected which will knock profits by £12m.

The committed order book currently stands at £470m, down from £600m at the half year.

Total long term framework agreements stand at £2.1bn, up from £2.0bn at the half year.

Rok had already signalled its intention to transition the business in preparation for the much tougher general economic climate expected in 2009. 

The group has been scaling back its contracting operations to focus on repairs, refurbishment and response maintenance. As a result, the duration of Rok’s projects is considerably shorter than for many in the sector and therefore the impact has been far more rapid. 

The value of property assets, held for resale, has been trimmed by £10m.