Carillion margins up as McAlpine deal pays dividends

Carillion saw profit margins rise during the first half of this year as cost savings continued to increase following the acquisition and integration of Alfred McAlpine in 2008.

Margins increased to 2.6% from 2.3% the previous year as cost savings following the McAlpine deal jumped to £35m from £15m with a saving of £50m predicted for next year.

The good news on margins came as pre-tax profits at Carillion soared 92% to £51.9m from £27m on a turnover up 13% to £2.7bn.

The company said support services continue to be a strong driver of growth while equity investments in Public Private Partnership projects generated substantial value including the sale of two school investments in Exeter and Renfrewshire in June 2009 which raised £13.8m.

Carillion has also expanded its Middle east operations into Abu Dhabi with turnover for the region expected to hit £600m this year.

The firm's forward order book stands at £19.7bn with a pipeline of probable new orders worth £2.9bn.

Carillion said performance in the UK construction market was "satisfactory, despite challenging trading conditions in our chosen sectors of the non-housing market."

The report stated:  "We have continued to win substantial new orders, particularly in the education, health and transport infrastructure sectors.

"Notable new first-half contracts included the £130m Project Bankside, a luxury residential development for Grosvenor on London's South Bank, the £300m Tameside Building Schools for the Future programme and the £209m upgrade of the A1 between Dishforth and Leeming in Yorkshire.

"Since the half year, we have won four further major high-quality projects, namely the £500m Durham BSF programme, a £116m contract for the Scottish Prison Service to design and build HMP Low Moss, a £50m contract for Segro plc to design and build office accommodation and a £45m contract to provide a new headquarters for the Greater Manchester Police Authority."