Solid results from Carillion despite revenue dip warning

WOLVERHAMPTON support services giant Carillion says trading is in line with expectations but has warned revenue will be lower than in the first half of 2011.

In an update to the Stock Exchange on first half 2012 trading, the firm says the planned re-scaling of UK construction, together with the timing of project starts in the Middle East, means total revenue will be lower than in the corresponding period last year.

But it says its total operating margin is expected to increase and its cash flow and balance sheet remain strong with net debt expected to be around £125m.

Its total first-half new orders and probable orders are worth up to £2.2bn while the group’s order book and probable orders is expected to remain strong at around £18bn and its pipeline of contract opportunities is expected to have increased to some £35bn.

The firm says the operational integration of Carillion Energy Services is largely complete, with integration cost savings expected to reach its target of £25m by the end of 2013.

Underlying profit and earnings are on track to meet full-year expectations, Carillion says.

“Despite challenging market conditions, trading in the first six months of 2012 is in line with the board’s expectations, as the group continues to benefit from a resilient business mix and from adhering to the strict selectivity criteria we apply to choosing the contracts for which we bid,” it said.

“As expected, total revenue will be lower than in the first half of 2011. This is due primarily to lower UK construction revenue, as we continue the planned re-scaling of our UK construction activities to align them with the shrinking UK market and, as also previously announced, to Middle East construction revenue being second-half weighted, which reflects the timing of project starts.”

Net borrowing at the half year is expected to be approximately £125m.