Listed construction companies took a hit on Friday morning as global markets reacted to news of a fire at a nuclear plant in the Ukraine.
Kier and Keller both saw the value of their shares fall by more than 7 per cent in the first two hours of trading on Friday.
Costain’s shares were worth 5.7 per cent less at 10am than when the market opened at 8am, while Balfour Beatty’s dropped by 3.2 per cent.
Of the 12 listed firms analysed by Construction News, 10 suffered a drop in value (see box below).
| Company | Share price 8am Friday 4 March | Share price 10am Friday 4 March | Percentage change |
| Kier | 92.7 | 85.5 | DOWN 7.8% |
| Keller | 790 | 729 | DOWN 7.7% |
| Costain | 38.69 | 36.5 | DOWN 5.7% |
| Renew | 655.89 | 630.7 | DOWN 3.8% |
| Balfour Beatty | 227.8 | 220.6 | DOWN 3.2% |
| Morgan Sindall | 2305 | 2245 | DOWN 2.6% |
| Watkin Jones | 231.25 | 225.5 | DOWN 2.5% |
| Henry Boot | 300.24 | 293.36 | DOWN 2.3% |
| Severfield | 69.28 | 68.02 | DOWN 1.8% |
| T Clarke | 125 | 124 | DOWN 0.8% |
| Galliford Try | 169.9 | 177 | UP 4.2% |
Shares in Galliford Try – which posted a pre-tax loss in its half-year results yesterday – briefly plummeted in value on opening but showed an increase over the following two hours.
Reports of a blaze at the mammoth Zaporizhzhia nuclear power plant in Ukraine overnight, apparently after attacks by Russian troops, led to stock market falls across the world. There has been some recovery in prices since authorities declared the site was safe.
Contractors were already bracing for a negative impact on the sector from the escalating conflict in Ukraine.
A number of key analysts told CN this week that Russia’s invasion of Ukraine could spark energy and fuel price hikes across Europe that in turn push up the cost of materials used on UK construction sites.
Galliford Try chief executive Bill Hocking said the firm was “keeping an eye” on events at the other end of Europe as it set its own inflation forecasts to inform bid prices.
Applied Value analyst Stephen Rawlinson said this morning’s share price drops show “what happens when fear strikes”.
He added: “The pattern this morning is clear, the ones with the relatively weak balance sheets have seen the largest falls.”
Rawlinson said that prices would eventually recover. “The next phase will be when the market recognises that large scale projects and infrastructure in the UK will need even more investment and these companies are crucial to building back better.”
However, data from the Chartered Institute of Procurement & Supply has revealed that construction firms are at their least positive about the future for more than a year.
The latest Purchasing Managers’ Index, put together in conjunction with analytics firm IHS Markit, is based on a poll of 150 companies last month. Just 48 per cent of these predicted an increase in output in the year ahead as concerns about costs and shortages left the industry in their least optimistic mood since January 2021 – the start of England’s third lockdown.
This comes despite a 13th consecutive month of growth for the sector and the fastest rise in output since last summer, according to the study.
Gareth Belsham, director of property consultancy Naismiths, warned there could be trouble ahead.
“The economic blowback of international sanctions on Russia could ripple through the industry in the form of renewed inflation in coming months,” he said. “As well as oil and gas, Russia is also an important source of timber – and this supply may now be completely halted.
“That may be why construction industry optimism, while still strong, has settled back to its lowest level for 13 months.”
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