Interserve maintains 2.8% construction margin

Grant Prior 11 years ago

Interserve’s construction division enjoyed a solid performance during the first half of the year as margins were maintained at 2.8%.

Figures for the first half of the year show the UK construction arm kept turnover steady at £364.8m  from £380.8m last time while operating profit dipped slightly to £10.2m from £10.9m.

Construction contributed to group results, including support services and equipment services, which saw overall turnover dip to £928m from £944.5m  as pre-tax profit increased  10% to £30.1m.

Long-term infrastructure and framework contracts were responsible for more than half of construction income.

Interserve is traditionally strong in the health, education and infrastructure sectors and is now “actively targeting” energy, waste and retail work to offset declines in public spending.

The firm said: “Signs of an anticipated moderation in public sector spending are reflected in the revenue decline but,
against this challenging backdrop, performance in the UK was very good, generating a margin of 2.8% which remains above both our historical range and our view of medium-term sustainable margins.”

Support services enjoyed strong growth as operating profits soared 76% to £15.7m on flat turnover of £538m.

Interserve has been concentrating on boosting margins in the division with a target of 5% as the Government continues its outsourcing programme while private clients like William Hill and Alstom account for 40% of work.

Life was more of a struggle at the equipment services division where the main formwork and falsework markets remained challenging.

Chief Executive Adrian Ringrose  said: “Interserve has performed well, delivering headline profit growth despite challenging market conditions.

“Support Services generated strong growth which, accompanied by a robust performance from Construction, more than offset the ongoing cyclical pressures in Equipment Services.

“Encouraged by the progress achieved in the first six months of the year and a growing bid portfolio, we maintain our guidance for 2011 and reiterate our belief that we have the capability to double earnings per share over five years.”

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