Operating profit was £14m for the six months to 30 June 1999, up 43% on 1998. Turnover was down to £784.7m from £831.3m last year. Analysts reacted coolly to the results.
One leading figure said: “It is disappointing, really. Margins are still low and the company is still perceived to have a problem with its adversarial culture.” He added that Carillion’s facilities management arm also continued to disappoint.
Group chairman Sir Neville Simms reacted angrily, rejecting the claim of an adversarial culture as rubbish. Commenting on the improved results, he said: “There is no new magic, but we are moving into the good markets.”
Sir Neville said that 40% of Carillion’s work was in growth areas such as infrastructure management, and he hoped to increase this to 60% in two years’ time. Operating profit from infrastructure management and services was £9.3m. He said Carillion wanted to obtain higher-margin work rather than simply increasing turnover, and the results were in line with that strategy.
Sir Neville said the UK civils market was dead but that he was excited by the prospect of the London Underground privatisation. He added that international prospects were improving, with markets in the Caribbean and the Middle East doing well, as well as France. “It’s not hurting us anymore,” he said.
Carillion’s share price was 126.5p on wednesday, a rise of 2p on Tuesday as the market reacted cautiously to the news.
Carillion has finally signed a deal to build a private finance initiative hospital in Swindon, Wiltshire. It is claimed that the £148m Princess Margaret Hospital will be the greenest building in Britain.
Carillion intends to insulate thoroughly, re-use all waste and avoid the use of gloss paint. Food for patients will be organic and sourced from local suppliers. Green campaigner Sir Jonathon Porritt advised the Carillion consortium after a previous scheme was turned down in 1997, when local conservationists attacked it.
- Tarmac, the building materials half of the demerger, recorded weaker interims than last year. Pre-tax profit fell £17. 9m to £31.8m in the six months to 30 June 1999 compared with the same period in 1998.
Group chief executive Roy Harrison said that it aimed to double the size of its continental European operations but that it does not intend to spend more than £100m a year on investment and acquisitions.