Carillion construction margins jump as profits soar

Aaron Morby 11 years ago
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Carillion’s construction arm hiked profits by 25% to £72m despite the challenging market which saw turnover slump nearly a third.

The contractor said it was reaping the benefits of swift action taken three years ago to downsize its construction business and bid selectively for work.

This approach dented turnover which fell 31% to £1.27bn but saw its stated operating margin rise from 3.1% to an industry-beating 5.6%.

Carillion said the construction business, which includes results from Canada but not the Middle East, had also benefited from a more integrated approach on PPP projects and with its support services customers.

The fall in construction revenue impacted on net borrowing at the group, which rose from £50m last year to £158m.

Carillion also confirmed its downsizing of the construction division was now complete.

The strategic shift is seeing the firm appearing on bid lists for several major building projects in London, including the Google building in King’s Cross and the Battersea redevelopment.

Across the group profits also rose 26% to £180m on revenue down 13% at £4.4bn.

Carillion Chairman, Philip Rogerson, commented:”Having rescaled our UK construction activities, we have also further improved the risk profile and the overall quality of our business.

“Looking forward, we expect market conditions to remain challenging in 2013.

“However, with a resilient business model, a strong order book and a substantial pipeline of contract opportunities, the group remains well positioned to achieve its targets of delivering annual growth in support services and of doubling annual revenues in the Middle East and in Canada, in each case to around £1bn, in the five-year period from 2010 to 2015.”

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