UPDATE 1-Carillion looks to support services to drive growth

Wed Mar 5, 2014 6:40am EST

Related Topics

* FY underlying pretax profit down 13 pct at 174.7 million

* Revenue down 7 percent at 4.1 billion stg

* Wins new contracts worth more than 520 mln stg

* Has book of orders and probable business of 18 bln stg

* Shares up 1 pct at 381.9p, hit highest since May 2011 (Adds CEO, analyst comments, background)

By Li-mei Hoang

LONDON, March 5 (Reuters) - UK support services and construction firm Carillion has unveiled a batch of multi-million pound contracts and a bigger focus on its expanding facilities management division, helping send its shares to a near three-year high.

Carillion, which maintains British railways, roads and military bases, said it planned to diversify its facilities management or support services business into sectors such as oil, power distribution and highways maintenance.

"The areas that we are focusing on for growth in 2014 are around the diversifications in support services," Chief Executive Richard Howson told Reuters on Wednesday.

"There will be more effort and investment, bidding for work in the oil and gas support services sector, particularly in the Middle East and in Canada."

Shares in Carillion were up 1 percent at 381.9 pence by 1115 GMT, after rising as high as 395p, their highest since May 2011.

The group said it had won new contracts worth more than 520 million pounds - including a five-year deal to help maintain Royal Bank of Scotland branches - and said it had a book of orders and probable business of 18.0 billion pounds.

"We've had a good performance in challenging markets, we have completed the rescaling of our construction business and we expect revenue growth in all three of our reporting segments during 2014 onwards," said Howson.

He said he also wanted to capitalise on the potential in the group's construction and support services business in the Middle East in the next few years.

"We are targeting growth in revenue over the next five or six years towards 1 billion pounds," Howson said, citing opportunities like the soccer World Cup in Qatar in 2022 and the World Expo in 2020 in Dubai.

"These events create huge amounts of infrastructure and social infrastructure investment ... and we will benefit from those as indeed we have done in the past."

Oriel Securities analyst Hector Forsythe said: "We expect each of the operating units to show growth in 2014, supported by positive underlying progress in the order book and opportunities pipelines."

The London-listed company has scaled back its energy services and British construction divisions, a move that contributed to a 13 percent fall in full-year adjusted pretax profit, broadly as expected.

Underlying pretax profit fell 13 percent to 174.7 million on revenue down 7 percent at 4.1 billion pounds. ($1 = 0.5998 British pounds) (Additional reporting by Paul Sandle; Editing by Sarah Young and David Holmes)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.