Galliford turnround

Galliford Try has got its construction division out of the red. The latest operating margin is 0.8% and the reshaped business is on track to hit its target figure of 2% within the coming two years, said Andy Sturgess, managing director of construction.
Sturgess was brought in 14 months ago to address the problems in Galliford's construction business. He took the axe to senior management - 20 senior posts were eliminated - and introduced a flatter structure. Sturgess drew up a new business plan, which put the focus on collaboration with clients in specific markets.
"It's so good working here," said Sturgess, who arrived from Skanska. "We now have over 80% of our work secured on a non-price-sensitive basis, either through PFI, negotiated, partnering or framework deals. PFI is one of the better blends, with margins running close to 2%, while a typical figure for frameworks would be 1.5%."
Galliford's latest interim results show group turnover (six months to 31 December 2003) 19% higher at £350m (£300m). Pre-tax profit was much healthier at £9.6m (£3.5m).
Sturgess' restructuring has taken £4m out of the construction division's cost base.
Health and education are sectors that Galliford now targets. It is down to the last two bidders on two large PFI projects: the £100m Northampton Schools, where Jarvis is the competitor, and Birmingham Schools 2 where Balfour Beatty provides the opposition.
Expansion within the Galliford Try Communications business has lifted turnover to £30m. "That gives us a 20% share of that market," said Sturgess. He has also backed a move to expand Galliford's affordable housing business at a rapid rate. "Turnover is £50m and we want to grow further at 20% a year," he said.
Despite the upturn in construction, Galliford's overall profit still relies heavily on the performance of the housebuilding division; it notched up an operating profit of £11m on turnover of £86m.