Carillion succeeds in winning more work at higher margins

Carillion is winning a higher proportion of its workload at margins of about 5%. Chief executive John McDonough said that the whole industry should double its aspirations from the typical figure of "2%-plus".
Latest interim results (six months to 30 June) show Carillion's turnover of £930m (£890m) yielded a pre-tax profit of £7.7m (£16.1m).
Profit wilted as a result of a £10m hit on the company's Not-tingham Express Transit project.
On work being bid, Carillion expects 5% margins on early contractor involvement road projects and "a little less" on ProCure 21.
In PFI, construction margins typically run higher than 5%, the subsequent fm work generating a similar level of profit.
Finance director Chris Girling was quick to explain that margins need to be robust as Carillion carries a high level of PFI bid costs: £6m in the first half of 2003 and in line to double to £12m by the year-end.
Carillion's historic strike rate for PFI work might be one-in-three, but this ratio has become rather dated as the shortage of rival bidders has resulted in a current figure of one-in-two.
"On our last two wins, we were one of two and on the two projects being bid we are again on shortlists of just two," said McDonough.
"As there are 27 hospitals to be awarded through the PFI route by the end of 2005, things won't get any better."
As PFI goes global, Carillion plans a selective involvement. "We're not going to chase it all round the world," said McDonough.
"We like Canada and certain areas in the Middle East, like Dubai and Amman. Our limitations mean that you'll not see us in such countries as Poland or Spain."