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Wed October 30 2024

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Carillion’s repositioning boosts construction margins

29 Feb 12 Carillion’s strategy of reducing its exposure to UK construction has resulted in a 63% hike in the profitability of its construction operations.

Carillion has sought to re-scale its UK construction business to stay clear of the melee of bidding for low margin work. While this meant turnover in the segment fell 17% in 2011, the operating margin rose from 1.9% to a far healthier 3.1%.

With the acquisition of energy services company Eaga – now Carillion Energy Services – making up for the reduced construction sales, total group revenue remained unchanged for the year to 31 December 2011 at £5.1bn.

Pre-tax profit was down 15% to £142.8m (2010: £167.9m), but excluding non-recurring items, such as the Eaga acquisition, underlying profit before tax was up 13% to £212.0m (2010: £188.1m).

Chairman Philip Rogerson said: "Carillion's integrated UK support services and international business mix has once again enabled the Group to perform strongly, despite challenging market conditions. Given the wider economic outlook, we expect trading conditions to remain challenging in 2012. However, with a strong and resilient business, good revenue visibility and a record pipeline of contract opportunities, we continue to target growth in support services together with the doubling of our revenues in the Middle East and in Canada, in each case to around £1 billion, by 2015. Consequently, Carillion remains well-positioned to deliver further growth in 2012 and beyond".

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