Laing O'Rourke produces a mixed bag of results

Laing O’Rourke’s various UK construction divisions have shown a remarkable upheaval in profitability in the past 12 months.

The bad news is that Laing O’Rourke Midlands has dived further into the red, logging a pre-tax loss (12 months to 31 March) of £19m on a turnover of £200m. The latest hit makes light of the division’s earlier woes – it ran up a loss of £3m in the previous year.

However, the good news is that two other divisions have ceased to make operating losses.

The biggest recovery is in the northern division, which has achieved a highly acceptable margin of 3.1%, thanks to a £13m pre-tax profit on a turnover of £410m. In the previous year, a turnover of £190m produced a pre-tax loss of £450,000.

Still well short of this quality of return, but at least in the black, is the London & South East operation, where turnover has rocketed to £470m from a previous figure of £290m. Improved management has seen the workload generate a pre-tax profit of £2.7m, which represents a margin of 0.6%.

London & South East made just £290,000 in the previous year on the back of a turnover of £290m (representing a margin of 0.01%), but O’Rourke then took the division into loss by extracting a £1m dividend.

In a fourth operating division, O’Rourke Civil Engineering, a £42m turnover gave a pre-tax loss of £650,000. In the previous year, turnover ran to £50m and in addition to suffering a £3.6m loss on operations, a dividend of £6.9m was paid out, taking the total loss to more than £10m.

[Contract Journal, 29 November 2006, p20]