Carillion UK construction margin to stabilise at 3%

Aaron Morby 7 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

BBC starts hunt for contractor to rebuild Eastenders set

Procurement race starts for £15m revamp of Albert Square
2 days ago

Lakehouse job losses could hit 170

Redundancy programme continues at Essex contractor
2 days ago

Contractor hunt starts for £185m mixed-use Manchester job

Green light from planners for twin resi towers and office block
2 days ago

Mobile crane explodes causing fireball on M40

Highway contractors are planning to resurface the damaged part of the M40 today
2 days ago

Morgan Sindall on recruitment drive for £750m highways deal

Recruitment events in East Anglia next week: Register now
2 days ago

John Sisk front runner for £28m Manchester PRS flats

Finance secured for developer Mulbury's 135-home Port Street project
2 days ago

Near-miss for Crossrail workers as train hits power cable

Investigation launched after construction train rips electricity panel from tunnel wall
2 days ago

Nationwide Platforms md takes Ardent chief executive role

Jeremy Fish joins Ardent to steer expansion drive
2 days ago

Kier posts loss after £116m raft of one-off costs

Kier counts cost of Caribbean closure and Mouchel and May Gurney integration
3 days ago

Council set to tender £26m Dover leisure centre

Contractor due to be appointed next August for new Whitfield swimming and sports complex
2 days ago

Betting Spy: Leicester a big price to beat misfiring Man Utd

Spurs, Everton and Man City can land a 5/1 treble
2 days ago

Willmott Dixon unveils off-the-shelf police cell design

Contractor works with Canadian architect to draw up modular cell block design
3 days ago

Celebrity hosts confirmed for Construction Enquirer Awards

Comedian Russell Kane and TV architecture expert George Clarke to host big night: Last few tables remaining
3 days ago

Highways workers move to new coloured hard hat regime

Days numbered for green and yellow hard hats
3 days ago

Vinci set for £73m student scheme in Coventry

Work to start next month transforming former Royal Mail sorting office site
3 days ago

Midlands council sets up loan-funded house builder

Wolverhampton Council aims to build 800 homes on council land over next four years
3 days ago

Plans in for third office at Brum Arena Central

Developers to push ahead with post-Brexit 230,000 sq ft spec office scheme
3 days ago

Scaffolders get suspended jail sentences after site death

Court hears how safety railing was removed from site
3 days ago

Crunch Crossrail meeting as sparks demand £75,000-a-year

Threat of industrial unrest looms on project as contractors hampered by skills shortages
4 days ago

Queensferry bridge sets record as longest free-standing cantilever

Bridge builders prepare for the final deck sections to link 2.7km Forth crossing
4 days ago

Styles & Wood buys data centre builder

Fit-out specialist makes move on £1bn data centre market
4 days ago

Carillion submits plan for £100m Lambeth College

Skills Centre £45m construction cost to be funded by new hotel and flats receipts
4 days ago

Wates starts on £70m Hoxton resi towers

Twin 20 and 16 storey towers to be completed by summer 2018
4 days ago

Loughborough Uni plans £40m student digs scheme

Work to start next August on 600-room student village
4 days ago

Hochtief wins £11m M4 junction 16 upgrade

Work to start in November on Spittleborough Roundabout improvements
4 days ago

Foreman run over on Crest Nicholson site

£800,000 fine after cement lorry accident
4 days ago

Credit insurance claims stalled in Dunne debt dispute

Subcontractors claim they are owed three times more than initial estimates
5 days ago

Green light for £80m Liverpool PRS tower block

Moda Living and Apache Capital get green light for 34-floor private rented resi tower
5 days ago

Manchester Uni picks partners for projects up to £10m

Graham, Kier and Willmott Dixon among firms picked for £175m programme
5 days ago

Skanska team starts Hinkley preparation work

RK Bell and Forest Traffic Services join Skanska in infrastructure alliance
5 days ago