Carillion UK construction margin to stabilise at 3%

Aaron Morby 9 months ago
Share

Carillion loosened the reins to deliver growth across its main operating divisions last year helping to lift revenue 13% to £4.6bn.

A strong performance from the construction group’s PPP investments combined with general revenue growth helped to drive pre-tax profits ahead 9% to £155m.

The construction division, excluding Middle East activities, was the only part of the business to show a small slide in profits, down to £38m from £42m in the previous year, as operating margin slipped from from 3.8% to 3%.

Carillion said that the benefits to profit from rescaling UK construction activities several years ago had largely ended .

The firm is now forecasting that its UK construction margins will stabilise at 2.5%-3%.

“We believe our selective approach to choosing the contracts for which we bid, together with our ongoing cost reduction programmes and efficient operating model, will not only enable us to maintain the margin within this range, but at a level above the industry average,” said the firm this morning.

The total value of new orders and probable orders won in 2015  slipped back from £5.7bn in 2014 to £3.7bn after a hiatus in major public sector contract awards caused by the UK General Election in May 2015.

Carillion trading divisions
Op profit % change Turnover % change
Support services £146.6m +8 £2.53bn +9
PPP projects £49.3m +43 £192m +19
Middle East Construction £25.3m +1 £602m +20
Construction exc Mid East £37.8m -9 £1.26bn +16

UK construction revenue increased to some £1.1bn (2014: £0.9bn), which more than offset the planned reduction in construction revenue in Canada, where Carillion has turned away from traditional construction to focus on construction work secured through winning Public Private Partnership contracts

Announcing strong group results in 2015, Carillion chairman, Philip Green, said: “Our performance in 2015 reflects the benefits of our consistent and successful strategy, which enabled us to rescale and reposition our business during the economic downturn in order to take advantage of opportunities for growth as market conditions improve.

“Growth in revenue, underlying profit before taxation and earnings per share was primarily organic, following the successful mobilisation of a number of major new contracts, supplemented by two bolt-on acquisitions, the Rokstad Corporation and the Outland Group, which have significantly enhanced our support services business in Canada.

“With a strong, high-quality order book, a large and growing pipeline of contract opportunities and the financial strength to support our strategy for growth, the Group is well positioned to make further progress in 2016.”

Investment in business acquisitions and Public Private Partnership projects, together greater contract mobilisation saw average net borrowing rise by nearly £90m to £539m.

Latest news

Contractor to be replaced at £200m Liverpool Chinatown site

Bilt Group being removed from developer North Point Global's sites
3 days ago

Construction buyers report surge in workloads

But material price rises hit five-year high
3 days ago

Sparks set to blockade Crossrail site

Industrial relations row with Crown House escalates
3 days ago

Dandara wins funding for three major PRS schemes

High rise projects in Manchester, Leeds and Birmingham to provide 2,000 rented homes
4 days ago

Lidl unveils £70m Doncaster warehouse plan

Construction to start next year at the iPort site in Rossington.
3 days ago

Berkeley profits soar despite 20% drop in buyers

Stamp duty hike hitting reservations but house builder sets new £3bn profit target
3 days ago

Bidding to start for £30m Lancaster Uni upgrade

Management School will be redeveloped next year
3 days ago

Graham wins £134m Aberdeen hospital project

Work will start on two healthcare facilities in 2018 at the Foresterhill Health Campus
3 days ago

Betting Spy: Chelsea look a big price to beat Man City

Blues worth backing at 5/2 while West Ham are well and truly in a relegation dogfight
3 days ago

Laing O’Rourke jv wins £350m Metrolink Trafford extension

Work to start in late January on 5.5km Metrolink Trafford Park line
3 days ago

Heathrow names seven firms for airport design

Amec Foster Wheeler, Arup, Atkins, Grimshaw, Mott MacDonald, Jacobs and Quod form expansion team
3 days ago

Electricians down tools on Crossrail site

60 Crown House sparks "cabin-up" as latest row erupts on job
4 days ago

Watkin Jones to start 24-floor Cardiff student tower

City centre Bridge Street scheme forward sold allowing building start
4 days ago

Plans in for £150m Assembly Bristol scheme

Property investor AXA plans to start work next year on Temple Quay scheme
4 days ago

Scientists plan “living lab” office to monitor worker health

BRE to refurb office block to run real life tests on impact of building products
4 days ago

Merged housing association giants plan 50,000 homes

Affinity Sutton and Circle Housing double construction plans
4 days ago

Green light for major London city office rebuild

60 London Wall building will be stripped back to steel frame for redevelopment
4 days ago

Highways England to replace Amey in Areas 6 and 8

Highways England and Amey part ways by mutual consent in eastern England
4 days ago

Hard Brexit will cost construction 215,000 workers

Skills gap could become a "skills gulf" as influx of EU workers slows down
5 days ago

R G Carter wins £23m Luton science block

University of Bedfordshire goes ahead with STEM building in Luton town centre
4 days ago

ISG set for £60m Westminster City Hall revamp

Work to start early next year on the two-year tower overhaul project
5 days ago

Bristol Uni plans £300m campus in Temple Quarter

Derelict former mail sorting office site to be transformed
5 days ago

Keltbray to expand sheet piling nationwide

Northern office now planned following move into Scotland
5 days ago

McMullen lands facade package for Google office block

Carillion awards subcontract for latest office block at King's Cross
5 days ago

Breedon expands in the north with £16m acquisition

Breedon bolts on cement import facilities with Sherburn Minerals deal
5 days ago

Chinese firm signs £85m deal to start on Manchester site

BCEG agrees construction contract for first phase of Middlewood Locks development
5 days ago

Sir Robert McAlpine bags Big Ben tower revamp

McAlpine secures pre-construction contract for £23m Elizabeth Tower restoration
6 days ago

London Mayor targets 90,000 lower cost homes

Capital's planning rules relaxed to encourage build to rent schemes
5 days ago

BAM drafted in for Hub South East framework

BAM joins Morrison and Graham as Scottish Hub gears up for expansion
6 days ago

Willmott Dixon splits into three sister businesses

Shake-up will allow residential business to seek new minority investor
6 days ago

Contractor services

Most read