Revenues fall at Carillion on construction sector woes

WOLVERHAMPTON-based support services group Carillion has announced a 12% fall in first half revenues during to the problems faced within the UK construction sector.

The group said the decline had been expected and was also to do with the timing of project awards in the Middle East, where performance is likely to be weighed towards the second half due to a rise in support services demand.

For the six months to June 30, 2012 revenue reported was £2,156.8m (2011: £2,453.5m) and the group said it expected revenue in the full year to be lower than in 2011. The group said it would be realigning its business to meet the needs of a reduced UK construction market and this was likely to offset any growth in the support services operation.

There was better news on interims profits. Underlying profit from operations increased by 8% to £80.7m (2011: £74.4m) and the group benefitted from an increase in operating margin.

Underlying pre-tax profit  increased by 1% to £73.1m (2011: £72.5m), after a £5.7m increase in the group’s net financial expense, £3.3m of which related to an increase in the group’s pension scheme interest charge.  Underlying earnings per share also increased by 1% to 14.4p (2011: 14.3p).

The group said net borrowing during the period rose to £115.2m (December 31, 2011: £50.7m), however, this was better than expected.

It added that the operational integration of Carillion Energy Services was now largely complete and it remained on track to deliver integration cost savings of £25m per annum by the end of 2013.

By the end of the period the group’s order book plus probable orders, which exclude variable work and re-bids, was worth around £18.3bn (December 31, 2011: £19.1bn), with the reduction since the end of December primarily due to the re-scaling of UK construction and the sale of equity in Public Private Partnership projects.  

It said the strength of its order book plus probable orders continued to provide good revenue visibility, which is currently around 92% of anticipated revenue in 2012.  At the half-year stage, the pipeline of contract opportunities had increased to a record level of around £35.6bn (December 31, 2011: £33.1bn), including a significant number of public sector outsourcing opportunities.

The board has increased the interim dividend by2% to 5.4p per share (2011: 5.3p).

Carillion chairman, Philip Rogerson said: “Carillion delivered a robust first-half performance, in line with the board’s expectations, despite market conditions remaining challenging.  

“Given the strength of our business model, order book and pipeline of contract opportunities, we remain on track to deliver full-year results in line with expectations and to achieve our medium-term targets, namely to deliver growth in support services and to double our annual revenues in the Middle East and in Canada in the five-year period to 2015, in each case to around £1bn.”