Sometimes it’s better to travel than arrive and this could be the case come results season for the listed construction firms. Over the past couple of months, relatively upbeat trading updates have been met with relief, rather than euphoria.
There were no big surprises in the trading statements we have seen, but construction firms don’t always see an immediate hit when the economy takes a turn for the worst. Sales and profits at the biggest firms are likely to show some growth for the year but it’s the outlook statement, accompanying the results, which will give the best indication of the next six or 12 months.
Order book levels will be a big area of interest, as these give a clear guide as to the level of work in the next few years. Just what has been the impact of the hiatus in awarding public sector work? Exactly how long will it be before the private sector recovery really kicks in? Will new contract wins offset the work nearing completion? These questions need answering in order to give investors a good idea of what future profits will be.
The share prices of several of the biggest listed firms have bounced ahead of the forthcoming results, which should provide the answers to these questions. Interserve, Balfour Beatty and Galliford Try have been by far the best performers since the start of December, when share prices started their increase.
However, when annual results are released later this month and in early March, some of these gains may be erased. It could be a good time to take profits if you were lucky enough to buy at the bottom.
Only Kier, of the biggest firms, has underperformed the FTSE All Share Index, which increased by 8.2% since December.
Full year results are expected on the following dates: Morgan Sindall, 22 February; Galliford Try, 23 February; Kier, 24 February; Carillion, 2 March; Balfour Beatty, 3 March and Interserve, 9 March.