Carillion turnover smashes £5bn barrier

Strong growth in UK construction workloads helped to take Carillion through the £5bn turnover barrier last year.

According to 2016 results published this morning total group revenue jumped 14% to £5.2bn in 2016, helped by the uplift in UK construction turnover from £1.2bn to £1.5bn.

Support services continues to be the main profit driver, although revenue growth at the division was more modest, up 7% to £2.71bn.

Underlying margins across the business came under pressure, falling from 5.3% to 4.9%, due to decreases for Public Private Partnership projects and Middle East construction services.

UK construction margins slipped from 3% to 2.7% – still an industry beating level for a major contractor.

The squeeze saw group pre-tax profits slide 5% to £147m.

Carillion Chairman, Philip Green, said In 2016, Carillion’s performance was led by revenue growth and an increased margin in support services, together with good cash flow.

“Given the size and quality of our order book and pipeline of contract opportunities, our customer-focused culture and integrated business model, we have a good platform from which to develop the business in 2017.

“We will accelerate the rebalancing of our business into markets and sectors where we can win high-quality contracts and achieve our targets for margin and cash flows, while actively managing the positions we have in challenging markets. 

“We will also begin reducing average net borrowing by stepping up our ongoing cost reduction programmes and our focus on managing working capital,” he added.”

Carillion saw a new orders and probable orders jump be around a third to £4.8bn.

Green said this was an encouraging given that the pace of contract awards in the UK slowed after the EU Referendum and that the prolonged low oil price continues to affect the pace of customers investment programmes in the Middle East.

He said that trading conditions in construction in the Middle East and in Canada, continue to be challenging.

In response Carillion plans to scale down its general construction activities in Canada to focus on more profitable private public partnerships projects.

In the Middle East, Carillion is now focused primarily on winning contracts with the support of UK Export Finance, helping to support margins, prompt payment times and good cash flow.

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