Targets unchanged for Carillion despite H1 revenue falling 9%

SUPPORT services group Carillion has said its full-year and medium-term targets remain unchanged despite markets remaining challenging.  The Wolverhampton-based company said the strength of new orders – worth £2.9bn – and pipeline of contract opportunities was the source of its optimism.

The bullish message helped to distract attention away from a mixed first half performance which saw revenues fall 9% but underlying operating profit increase 8%.

The group said the reduction in total revenue to £1,964.6m (2012: £2,156.8m) was due primarily to the planned rescaling of its UK construction activities, which began in 2010.

Underlying profit from operations (1) increased to £92.3m (2012: £85.1m), with the group’s underlying operating margin increasing to 5.1% (2012: 4.3%)).  It said first-half profit benefited from an increased contribution from the sale of equity investments in Public Private Partnership projects, which more than offset the expected reduction in profit due to the rescaling of the UK construction activities, revenue from which has broadly halved over the past two and a half years.

There were also slightly lower profit contributions from support services and Middle East construction services.  However, it said it continued to expect revenue and profit from support services and Middle East construction services to be weighed towards the second-half.

Carillion chairman, Philip Rogerson, said: “Carillion’s first-half performance was in line with the Board’s expectations.  Despite market conditions remaining challenging, new order intake was strong, with £2.9bn of new orders and probable orders in the first half of the year, which enabled the group to increase the total value of its order book plus probable orders to £18.4bn.  This, together with a strong pipeline of contract opportunities, continues to support the group’s 2013 and medium term targets.”