Carillion reaps reward for being selective

The Wolverhampton-based firm said it has grown profit margins by being more selective in bidding for contracts, which helped offset a decline in UK construction revenues amid the Government’s austerity drive. Carillion was also encouraged as more local authorities outsourced work to make efficiency savings, citing a recent £700m property and facilities management contract for Oxfordshire County Council.

But shares fell as its order book slipped to £18bn from £19.1bn and it said it expects its markets to remain challenging.

Carillion employs around 45,000 people and operates across the UK, Canada and the Middle East, generating sales of more than £5bn a year. Its portfolio of projects includes schools, universities, hospitals, roads, prisons and defence projects.

It has also upgraded large sections of the UK rail network such as the West Coast Mainline and constructed the M6 Toll motorway. Other recent wins include a £45m Highways Agency contract to upgrade the A23 near Handcross in Sussex and two energy services contracts with the Northern Ireland Housing Executive worth £60m.

The group said the second half of its financial year would be boosted as a number of contracts start in the Middle East.

It was on course to double revenues in Canada and the Middle East over the five years to 2015, which would help it meet its medium-term targets.