Carillion limits exposure to post-Brexit uncertainty
Extensive work to manage the potential impact of the UK leaving the European Union appears to have paid off for Carillion, which is remaining upbeat about its prospects for the year.
In a half-year trading statement this week, the building support services company revealed an increase in revenue and margins in the first six months and the group is now on track to deliver growth this year with 97 per cent of targeted revenue in place for 2016.
Carillion chief executive Richard Howson said Brexit was unlikely to impact on Carillion in the short term although the longer term effect was more uncertain.
“The referendum vote in favour of the UK leaving the European Union has obviously created uncertainty for the UK economy as a whole and therefore for businesses generally, including Carillion, and it is clearly too early to predict the extent to which businesses will be impacted by this result.
“However, Carillion has no significant operations in Mainland Europe and prior to the referendum we undertook extensive work to assess the possible impact on our business of a vote to leave and we have put in place robust plans to manage this outcome,” said the trading statement.
Carillion’s construction arm continued to deliver strong margins of around 2.5-3 per cent in the first half of the year as it stuck to its selective bidding strategy.
Howson said support services was now expected to drive group turnover and profit growth for the full year, putting these activities on track to deliver two thirds of total operating profit.
The company said it was bidding for five lots of UK defence contracts that could be worth as much as £600 million in revenues. Its order book stood at £17 billion at the end of the first half, during which it won support services contracts worth up to £600m, including two contracts from the Northern Ireland Housing Executive and an extension of a contract for Petroleum Development Oman (PDO).