Interserve bets on construction recovery in 2014

Aaron Morby 12 years ago

Profits at Interserve’s UK construction arm fell 27% to £7.3m in the first half as margins came under pressure in a more challenging market for main contractors.

The firm warned that it expected the construction market to remain subdued until 2014, but said that support services continued to grow strongly.

Despite the downturn, Interserve’s UK construction business managed to maintain turnover at £366m as the construction team secured work for new clients such as Jaguar Land Rover and Viridor, and reaped work from longterm partnering deals with National Grid and Magnox.

UK construction margins fell from 2.7% a year ago to 2% in the first half of the year, although future workload was relatively stable year on year at £1.1bn.

The international construction arm picked up further power sector orders in both Oman and Qatar and maintained turnover at around £100m, delivering a £7m profit.

Chief executive Adrian Ringrose said: “We expect both UK and international construction revenues to remain subdued in the near term with growth potentially resuming in 2014.”

Across the Interserve Group first half turnover rose 3% to £1.2bn and profits were also up 8% at £32.6m, supported by growth in support services.

Ringrose said: “We have delivered a good set of results against a backdrop of continuing mixed market conditions.

“Our ability to offer our clients intelligent solutions is reflected in growing revenues and profits together with an increasing future workload.”

He added: “Support services generated strong growth accompanied by a robust performance from construction and a continuing recovery in equipment services.”

Support Services UK delivered a strong performance, with revenues up 11.5% at £572m as a result of our focus on account development and new business wins.

Its contribution to group profit rose 24% to £19.6m with an uplift in operating margin to 3.4% (H1 2011: 3.1%), reflecting further cost reductions and the emerging scale benefits of increased revenue.

The division derives 65% of its revenues from the public sector and 35% from the private sector, with major customers such as the Ministry of Defence, DEFRA, the Foreign and Commonwealth Office, Sainsbury’s, Prudential and Alliance Boots.



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