Carillion on track despite Middle East headwinds

FTSE 250 support services firm Carillion saw a slight fall in its share price on Wednesday after it reiterated that the operating margin in its Middle East construction services sector has continued to move back towards the six per cent mark.

By MoneyWeek

published 2 May 2012

in Features

This has occurred as negotiated contracts are replaced with contracts that have been competitively tendered, the firm said.

Excluding the Middle East, the construction services sector has continued to benefit from the re-scaling of the UK business to align it with the market. This is expected to be complete by the end of the year with strong operating margins as a result.

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Overall the company is performing on track after a solid start to the year, despite ongoing challenging conditions.

"We continue to have a strong order book and a record pipeline of contract opportunities," the firm said.

"Encouragingly, we are beginning to see the award of some of the larger, more complex Local Authority support services contracts that are designed to help these Authorities deliver savings, while maintaining good quality, value-for-money services.

"Despite challenging market conditions, with a strong order book and record pipeline of contract opportunities, we remain focused on our strategic objectives of growing support services and of doubling revenues in the Middle East and in Canada, in each case to around £1bn, by 2015."

In support services the company has benefitted from recent contract wins, while the Public Private Partnership Projects division is also on track.

The share price fell 0.24% to 294.10p by 14:03.