Interserve construction profits fall 27%

Aaron Morby 11 years ago

Interserve construction profits dipped sharply last year as the downturn depressed margins.

Construction division operating profit fell 27% to £35m on turnover broadly flat at £954m.

Despite the fall from last year’s high, UK margins slid to 2.5% which kept Interserve in line with industry averages. The international business also saw profits down a quarter with margins at 8.4%

Adrian Ringrose, chief executive, said: “Construction has done well both in the UK and internationally in a tough market where margin pressure and increased competition have had an effect.

“Significantly, our UK construction future workload stands at £1.2bn slightly higher than the £1.1 bn at the end of 2010.”

He said that Interserve did not expect the construction market to show much growth before 2014.

“We are well-positioned in key sectors and are managing our resources flexibly so that we shall be able to respond swiftly as and when the market returns to growth.”

Across the group revenues and profit were maintained at similar levels to the year before.

Pre-tax profit edged up 5% to £73m on turnover was flat at £2.3bn.

    Interserve UK divisions

  • Construction: profit £18m (£24.5m) , turnover £731m (£754m); margin 2.5% (3.2%)
  • Support services: profit £36m (£25m); turnover £1,007m (£1,025m); margin 3.6% (2.4%)
  • Equipment: profit £14m (£14m); turnover £154m (£140m); margin 8.8% (10.3%)

Ringrose said: “We made further excellent advances in increasing the margins in support services and are on track to reach our target for the division of 5% by the end of 2013.

“Equipment services is emerging from the bottom of the cycle in good shape, improving margins and making a good return on capital.

“We won over £2bn of work during the year, expanding our future workload to £5.6bn.

He added: “We anticipate stable trading in 2012, with pressure on construction being balanced by further improvements in support services’
margins and recovery in equipment services.

“Looking further ahead, with good potential in our existing markets, expansion into new markets and our strong balance sheet, our medium-term growth prospects are strong.”

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