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Contract woes force Emcor rail exit

Huge losses at its rail division have seen M&E contractor Emcor nosedive into the red, prompting the firm to pull out of the sector.

The firm said it decided towards the end of last year to stop bidding for work in the market, which has previously seen it work on high-profile jobs such as the Jubilee Line Extension and the Channel Tunnel Rail Link.

Emcor said profits had “been adversely affected by the unfavourable final settlement of a number of significant contracts within the rail division”.

In its latest report and accounts filed at Companies House, the company, which used to be known as Drake & Scull, said it made a pre-tax loss of £12.3 million at its rail business on turnover of £42.3 million in the year to December 2007.

Its continuing businesses, which concentrate on work in the facilities services and engineering sectors, produced a pre-tax profit of £6.2 million on turnover of £336.4 million.

But the rail arm meant overall figures crashed into the red, ending up with a group loss of £6.1 million - down from the £4.3 million pre-tax profit last time - on turnover which slipped four per cent to £378.7 million.

The accounts also reveal that Emcor has still not settled a dispute with Carillion, which the latter inherited when it took over Mowlem in 2006.

Mowlem built the home of the Ministry of Defence’s procurement arm at Abbey Wood in Bristol and appointed Emcor - then known as Drake & Scull - to carry out the M&E work.

In 2003 Mowlem slapped a £39.5 million claim on the firm alleging Emcor had made a series of blunders. Emcor hit back with an £11.6 million counterclaim. The dispute is about the scope of the contract and what Emcor actually priced and what it ended up costing.

In a statement, the firm said its forward order book stood at £480 million and activity in the first half was ahead of plan.

The number of employees at the firm last year slipped eight per cent last year to 3,167, bringing its wage bill down by £1 million to £104 million.