Shares have since recovered somewhat, and are currently around a third lower than yesterday's closing price.
Profits will be lower and Carillion is struggling to sell businesses earmarked for sale. This means net debt will be higher than thought and it will breach covenants.
Here's how the City reacted:
Carillion said it plans to rejig its balance sheet, asking lenders to swap their debt for shares in the firm. Hyett said this was "inevitable".
[But] with debt even higher than the group had anticipated, is probably as bad as anyone would have guessed.
"The group has made some progress on asset sales, and it sounds like some cost savings are being made. It’s not what the group expected though, and it’s clearly not enough. It’s also probably irrelevant given the state of the balance sheet, with net debt already many multiples of the group’s market capitalisation.”
Too big to fail
“Just when you think things cannot get worse," begins ETX Capital senior market analyst Neil Wilson.
Some investors might think this is the end, but Carillion is too big to fail. Government intervention is possible but this is a nightmare for ministers at such a sensitive moment for the economy.
"Disposals haven’t gone as quick as forecast, a big Middle East contract is delayed and margin improvements in UK services contracts have been less than expected. All of which is hardly a major surprise to those watching the meltdown from the side lines.
It was always a huge ask to get the house in order by the end of the year and it looks like, as we suggested in September ahead of the interims, any turnaround strategy would be too little, too late. Market cap is now £180m and will be even lower by the end of today, which will make the recapitalisation that much harder.
"But it’s winning contracts. Its 50:50 joint venture has just won a £240m contract to build a hospital in Oman, with another £120m contract due to be signed soon. Newly announced contracts from Network Rail are worth £192m over the next three years. And it’s won a pair of HS2 contracts worth £1.4bn as part of its CEK joint venture with Eiffage and Kier. But this is little solace for investors.”