Carillion says it’s on track to meet expectations but profit from PPP projects will decline
Carillion said today that it is on track to meet expectations in its results for the year, with strong growth in revenue and profit, but added that the impact of the EU referendum and prolonged oil price had hit its order book in the second half.
The construction services group said new orders plus probable orders in 2016 is expected to reach £4.5bn, with orders in the second half expected to be £2.5bn lower than in the first. The company said new order intake slowed in the second half, partly due to changes within government departments following the EU referendum, and partly due to the prolonged low oil price.However, total orders plus probable orders of around £16bn by the end of the year.
The firm said its performance in 2016 reflects its strategy for "sustainable profitable growth through investing in our people, building long-term trusted partnerships, transferring knowledge and skills to new and existing markets in order to expand our support services and infrastructure activities and providing a selective, high-quality construction capability".
In support services, Carillion expects profit and revenue to grow, as a result of "major new contracts mobilised in 2015", contracts secured in 2016, and investment made in the firm's systems.
The group said it expects strong revenue growth in its public private partnership (PPP) projects, but said underlying operating profit will decline because profit from equity sales will be lower than in 2015.
Looking ahead, Carillion said it's well positioned to make further progress next year, "given the strength of our order book, framework contracts and pipeline of contract opportunities".
"We will continue to be selective in terms of the contracts for which we bid and adapt to trends in our geographies and key markets, in order to focus on new or growing opportunities, such as those we expect in our infrastructure services markets, both in the UK, and in Canada," the company said.
The group expects the proportion of total revenue and profit from its support services operations to continue growing, which will offset further reduction in profit from PPP projects.