Gleeson redeemed

Contractor Gleeson last week showed that although bad news leads to a fall in share price, the situation can be quickly turned round once the dust has settled.

Gleeson was the best performer within the construction and building materials sector last week, with shares rising more than 10% to 252.5p. Shares have risen by almost half since its 12-month low of 170p in August last year.

Dips in the share price since then are partly explained by a restructuring of its construction arm, after low margins led to job losses and a shrinking of the division. It has estimated that the cost of restructuring will be 拢4-5m, reflected in the balance sheet for the year ended 30 June this year.

However, the City likes nothing better than certainty, and the fact that it has been given plenty of warning has been welcomed. It has also responded well to the news that the firm intends to be choosier about new projects, or more specifically profit margins.

Better news has undoubtedly kept Gleeson鈥檚 share price up there since the middle of this month, including the announcement that it has signed a five-year framework agreement with London Underground, worth more than 拢75m.

In the support services sector, PFI specialist John Laing announced in a trading update that profitability would be hit by a 拢100m pensions deficit, mainly for employees of its former construction business, now in the hands of O鈥橰ourke.

The fact that it is in line to meet market expectations for its full financial year was not enough to stop its shares falling 6.5% to 257p.

However, Ultraframe was the worst performer in the construction sector overall. Shares dropped 15% to 49p after a poor trading statement.

Housebuilders had a fairly stable week, with little movement. Among the best performers was regeneration specialist, Berkeley, which rose 2.2% to 823p. Although a strong set of results from Crest Nicholson sent shares up 2% last Wednesday, it closed down 2.4% to 371p at the end of the week.

Overall, the construction sector was almost static at 3421, reflecting the performance of the All-Share, which rose less than 1% to 2430.

Angela Monaghan is business editor