Taywood and Alfred McAlpine congratulate themselves on anticipating outsourcing trend among multinationals

Alfred McAlpine and Taylor Woodrow this week claimed that they are reaping the benefits of their move into the facilities management sector – and that the market has finally matured.

Oliver Whitehead, chairman of Alfred McAlpine, said that his firm’s recent deals with Royal Sun Alliance, J Sainsbury and defence engineering service ABRO have contributed to an 8% increase in the firm’s order book to £3.2bn.

Whitehead said in his chairman’s statement for the half year to 30 June: “The continuing trend for major public and private organisations to outsource non-core services is one of the principal growth drivers of our group.”

Taylor Woodrow, which has recently secured deals with Shell and telecommunication firm O2, agreed that the market was expanding. Peter Johnson, Taylor Woodrow’s finance director, said: “It’s definitely part of a business trend we are seeing.”

Johnson said that FM work was relatively lucrative. He said: “Although it’s a young business for us, we are making margins at or above what you would expect in construction.”

As well as providing acceptable margins, FM is attractive because it offers longer-term deals and longer and more secure income streams.

Johnson said the group had “steadily de-risked” its construction activities in the past four years.

Outsourcing is a principal growth driver of our group

Oliver Whitehead, Alfred McAlpine

He said: “We are concentrating on repeat business with blue-chip clients, such as Tesco, and on the healthcare PFI market.”

Turnover in Taywood’s construction division for six months to June was up by £18m to £191m.

Taywood posted a pre-tax group profit of £169m for the six months to 30 June, an increase of 31% on last year. Group turnover for the period was £1.4bn

The company said it expected to complete about 10,000 homes in the UK in 2004, with an average selling price of £198,100, a 6% increase on last year’s selling price.

In North America, its second biggest market, the company expects to complete 3500 homes in 2004.

Alfred McAlpine, however, had a flatter first half. Turnover was up £15m to £439.7m, but pre-tax profit slipped 8% to £13.6m owing to a short-term drop in the infrastructure market.