Carillion's plan to shrink its UK construction business will see the firm focus on contracts for PPP projects and its support services clients.
The contractor, which plans to reduce its annual UK construction revenue by one third over the next three years, from 拢1.8bn to 拢1.2bn, said it will achieve this 鈥渢hrough applying strict contract selectivity criteria鈥� and concentrating on 鈥渄elivering integrated solutions for PPP projects and our support services customers鈥�.
In an interim management statement for the third quarter of 2010, Carillion said it 鈥渃ontinues to perform well, in line with its strategy for growth".
New orders in the last quarter have included contracts for support services customers worth 拢200m in the energy sector, and 拢60m in the financial services sector. Carillion expects annual revenue from its Openreach support services contract to increase from 拢115m to 拢145m, reflecting an increase in scope.
In Dubai, the construction聽arm has been awarded a 拢124m deal to build a residential development.
Carillion said its support services business, the group's largest contributor to operating profit, continues to perform well, boosted by 鈥渙utsourcing opportunities for UK public sector customers, notably local authorities, arising from the pressure they are under to reduce costs substantially鈥�.
Its PPP business continues to grow, and in the UK and Canada the firm is shortlisted for six major projects with a combined potential equity investment value of up to 拢180m.
In the Middle East, as expected, Carillion said revenue is growing 鈥渟trongly鈥�, while growth in Canada will offset the reduction in the UK construciton business.
Summarising the firm's outlook and strategy, the statement concluded: 鈥淚n the medium term, we continue to target strong international growth and substantial growth in UK support services. In Canada and in the Middle East, we expect to double our annual revenue over the next three to five years, in each case to around 拢1bn.
鈥淚n UK support services, we expect substantial opportunities for growth as we move through 2011 and into 2012 and 2013, as pressure on both central and local government to reduce the cost of public services leads to an increase in outsourcing.鈥�
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