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M&E firm's rail woe prompts withdrawal

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

The firm said it took a decision 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 performance of the rail arm meant overall figures crashed into the red last year, 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 £378.6 million.

The accounts also reveal that Emcor has still not settled a claim with Carillion on a dispute the latter inherited with its takeover of 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 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.

The salary of the highest paid director edged up £5,000 to £331,000.