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Carillion to scale back UK construction by one third

6 May 10 Carillion will scale back its UK construction business by a third, chairman Philip Rogerson told the firm's Annual General Meeting yesterday, in a trading update for the period 1 January to 5 May 2010.

Carillion will scale back its UK construction business by a third, chairman Philip Rogerson told the firm's Annual General Meeting yesterday, in a trading update for the period 1 January to 5 May 2010.

He said: "In construction services (excluding the Middle East), we are making good progress with re-scaling our UK business in line with our planned reduction in its annual revenue from around £1.8bn in 2009 to some £1.2bn by the end of 2012. This will ensure we maintain the construction capability needed to support the delivery of integrated solutions for Public Private Partnership projects and other support services customers, while reflecting the decline we expect in other market sectors."

Carillion said it had 100% of expected revenue in construction for 2010 covered by its order book and "probable orders". It aims to improve its overall construction margin, including the Middle East, "towards 3%" in 2010.

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Since the end of 2009, the firm achieved financial close on two further PPP projects, Southmead Hospital in Bristol and the Rochdale Building Schools for the Future programme, in which it will invest over £52 million.

In support services, Rogerson said: "The outlook continues to be positive as we continue to win new orders. As indicated in our preliminary results announcement, we expect the operating margin in support services to improve to around 5% in 2010, with revenue declining slightly, due to the disposal of non-core businesses in 2009 and also to contract selectivity."

He concluded: "With a resilient business mix, a substantial order book and a strong pipeline of contract opportunities the Group remains well positioned to make progress in 2010, in line with our expectations".

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