Carillion secures £122m rail contracts but warns of H1 revenue decline
WOLVERHAMPTON-based Carillion has been awarded two contracts by Network Rail worth a combined £122m. The announcement is set to encourage shareholders ahead of an expected decline in first half revenue.
The contracts, due for completion in 2017, cover the Crossrail West Inner Track Improvements and Crossrail Old Oak Common and Paddington Approaches and Intercity Express Programme.
The company said the contracts, which involve a wide range of services including design, track work, switches and crossings, overhead line and cable management, together with minor civil engineering works, would enable the new Crossrail service to be integrated into Network Rail’s existing infrastructure from Stockley Junction in the West through to Old Oak Common on the approaches to Paddington.
Commenting, Carillion Chief Executive, Richard Howson, said: “As one of Network Rail’s largest suppliers, we are delighted to have been selected for these important contracts. We look forward to continuing our strong relationship with Network Rail through working together to delivering the upgrades required to enable Crossrail to connect to the existing network between Stockley Junction and Old Oak Common.”
The announcement came as Carillion issued a trading update ahead of its interim results on August 22, 2013.
The group said performance in the first six months had been in line with expectations and full-year targets remained unchanged. Bracing shareholders for reduced first half revenues, it added that the re-scaling in the UK construction sector had impacted on sales.
However, it said that in spite of this, total revenue in the second half of 2013 was set to be higher than in the first six months as it continued to target growth.
Also, first-half underlying operating profit was expected to increase and the group had been boosted by a strong new order intake strong with probable work amounting to £2.9bn. Net debt at the end of the half-year is expected to be around £270m.
In outlook, it said: “Despite market conditions remaining challenging, new order intake has remained strong and we have continued to win good quality work, in line with our selective approach, to maintain a strong order book and good revenue visibility.
“In addition, our pipeline of contract opportunities has increased. Therefore, our expectations for the full year and our medium-term targets for growth, remain unchanged.”
