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CN Briefing: Carillion; Brexit; results; blacklisting

“Nothing’s perfect everywhere, as you well know,” says Carillion corporate affairs director John Denning.

It may be that nothing’s perfect, but Carillion’s performance for the first half of the year has undoubtedly been a strong one, with both revenue and profit up year on year.

Group revenue was up 10 per cent to hit £2.49bn, while the company added that it expected margins to return to “a more normal level” of between 2.5 and 3 per cent longer term, after posting a 3 per cent margin for the first half of the year.

Mr Denning was in a positive mood. “It’s a bit like groundhog day,” he mused, pointing to the firm’s trading update released in July. “Nothing has moved since then.”

Even in the wake of the EU referendum and the ongoing political uncertainty, has nothing really changed?

”There’s been a lot of chat about the impact on house prices and confidence, but certainly there’s been no immediate impact on our business,” he said.

And broadly, that reflects an attitude shared by a number of companies in the construction sector who have spoken to Construction News over the past month – for example Bam Construct’s James Wimpenny and David Ritchie of Bovis Homes.

And Mr Denning says that, because of steps Carillion took during the last recession, the company is well placed to defend itself against any future economic turmoil to come.

”What we’ve got now is a really tightly run business that’s doing £1bn-plus with best-in-class margins, which we think we will maintain for the full year,” he said.

“It’s at the top end of our target range and well above the industry average.”

Mr Denning’s confidence seems well founded, with upcoming data from the annual CN100 contractor league table – look out for it next Tuesday – suggesting the industry’s average margin is far from healthy, particularly for larger contractors.

However, it’s not all been a success for Carillion, with the firm missing out on a place on the ProCure22 framework, which Mr Denning admitted was disappointing.

But with Carillion’s order book of £2.5bn in the year keeping pace with revenue growth, the company remains positive.

The contractor is confident around projects such as Airport City, despite the fact it has been remarkably quiet of late, and Mr Denning noted that the firm’s “expectations hadn’t changed” on how much Carillion is set to win from the £800m programme.

The firm wants to draw a line under blacklisting, but its results today showed it’s an expensive case to move on from, with Carillion setting aside £10.5m to pay to victims.

But although in the current climate describing anything as certain might seem presumptuous, from these results, it seems Carillion’s confidence is well-placed.

Also in the news

There’s been yet more results from both Bam Construct and Costain, both of whom have spoken to Construction News today.

Listen: CN has released a special podcast looking ahead to the construction conference of the year - the CN Summit.

And don’t forget, you can catch up on CN’s Specialist Index 2016 here – all the analysis and data you could ever need on the seven major specialist sectors.

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