Carillion UK construction margin to stabilise at 3%

Aaron Morby 6 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

160 jobs at risk in LSC Facades financial crisis

Hampshire building facade specialist fails to pay staff salaries
8 hours ago

Fire safety fears force remedial work at Skanska PFI hospital

Contractor called back to check building work at £440m job in Coventry
19 hours ago

Bathroom pod specialist owes £3m to creditors

Benchmark Pods appeals to suppliers to keep trading after cash crisis
9 hours ago

Wates wants to meet new subcontractors in Northamptonshire

Meet the Buyer event to boost local supply chain: Register now
9 hours ago

Brookfield dropped from Multiplex name in rebrand

Contractor reverts to Multiplex name after nine years
18 hours ago

BAM wins £30m Preston university engineering centre

Work to start in January on Central Lancashire Uni's engineering innovation centre
9 hours ago

ISG starts £61m Imperial College White City fit-out

Firm will fit-out molecular sciences research hub being built by Laing O'Rourke
1 day ago

HSS Hire losses ease in first half

Hire firm say investment in national distribution centre will bring further operational efficiencies
8 hours ago

Balfour Beatty resurrects Kilpatrick name for new M&E arm

New £300m revenue M&E business formed from merger of engineering services into engineering construction operation
5 days ago

Vast plan to rebuild Barking shopping centre

Vicarage Field shopping centre to be replaced by 850-home, retail and leisure scheme
1 day ago

M20 bridge collapses after digger on lorry collision

Footbridge crashes on to vehicles causing Bank Holiday traffic chaos
3 days ago

Higgins wins £24m London housing project

More than 125 homes of mixed tenure will be built in Brent for Metropolitan housing association
1 day ago

Balfour seals £35m deal on Perth transport project

Work will start in September on the first phase of the Perth Futures Transport Project
1 day ago

Last chance to vote for the best in construction

10,000 votes already in for Enquirer awards. Top Ten winners to be revealed this week
1 day ago

Construction director jailed for expenses fraud

Two-year sentence for "wildly overstating" figures in £275,000 swindle
1 day ago

Business still booming for electrical contractors

ECA survey finds confidence high among 80% of firms despite Brexit vote
1 day ago

L&Q gets green light for £80m London project

Work to start on Whitechapel housing-led scheme early next year
9 hours ago

Great Ormond Street starts talks for £190m phase 4

Trust aims to appoint main contractor and design team in the Spring
5 days ago

Galliford Try kicks-off London regen zone with £175m project

First major scheme in capital's Old Oak Common zone to start in the New Year
5 days ago

Speedy offloads large plant fleet for £14m

Ardent Hire snaps up troubled firm's excavator, dumper and road roller fleet
5 days ago

McAlpine wins £16m HQ for world’s biggest telescope

Work to start in December at University of Manchester’s Jodrell Bank site
5 days ago

Three in race for £33m Strathclyde Uni sports and health complex

Balfour, BAM and Morgan Sindall in hunt for University's next Glasgow building project
6 days ago

Essential Living goes modular for 23-storey PRS tower

Fast-tracked Creekside Wharf will be one of the country's tallest modular buildings
6 days ago

CITB warns apprenticeship levy to cut funding by 30%

Industry training board warns firms will be deterred from taking on apprentices
5 days ago

Brickbats fly over looming brick shortage fears

Row kicks off after estate agents blame house price rises on lack of brick supply
6 days ago

Betting Spy: Jeremy Corbyn can make us all money

Tories look a good thing at evens to win a majority at the next election
6 days ago

Bam Mott JV green light for £36m Hull flood defences

Bam Nuttall/Mott MacDonald JV to shore up defences along a 7.5km stretch of the river
6 days ago

Government to miss new homes target by over 250,000

The Treasury is rumoured to be finalising plans for a fresh housing stimulus
6 days ago

Kier starts £48m Cambridge tech firm HQ expansion

ARM HQ expansion at Peterhouse Technology Park gets underway
6 days ago

Tube maintenance taken away from Amey in bid to save £80m

Transport for London to take work back in-house on Jubilee, Northern and Piccadilly lines
1 week ago

Contractor services