Financial results also show 30% cut in European workforce as Ray O’Rourke says firm has shown resilience
Laing O’Rourke today announced a halving of its profits amid a 30% cut in its European workforce.
The construction giant’s results for the year to 31 March 2011 showed pre-tax profit dropped from £50m to £26m while staff numbers in Europe fell from 16,788 to 11,589.
Turnover fell slightly from £3.5 bn in 2009/10 to £3.3bn in 2010/11.
We will expand selectively into markets where the work opportunities are greatest
Ray O’Rourke, Laing O’Rourke
Chairman and chief executive Ray O’ Rourke said the results demonstrated the firm’s resilience despite the “continuing economic turbulence”.
“We continued to steer the company through recession, posting a profitable performance and winning new work in parallel, reflecting progress on all fronts,” he said.
“Our focus on operational excellence has paid real dividends in both financial and strategic terms. We continue to hold substantial cash reserves on our balance sheet, while at the same time reducing our debt levels by £110 million.
“We are exercising selectivity in our project portfolio to improve earnings quality over time while simultaneously investing for growth in new markets and sectors.
“Looking forward, the engineering and construction sector will continue to face into an economic storm for the foreseeable future. While these and a number of other uncertainties remain in the immediate term, our medium-term view of demand growth remains positive, and we will recommence revenue growth from 2012/13.
“In this environment we will focus on protecting cash reserves and maintaining earnings quality at the individual project level. In this regard we will expand selectively into markets where the work opportunities are greatest, but we will only do this in a responsible way that fits with our business ethics.”
Group finance director Anna Stewart said Laing O’Rourke had continued to invest in new sectors and territories despite difficult conditions including in the Australian market.
“We are on track to deliver our 2011/12 targets and are once again seeing the benefits of our vertically integrated delivery model,” she said. “We continue to be selective but decisive in the opportunities we pursue and have already secured major contracts in target markets, demonstrating the tangible progress being made in transforming the intent of our strategy into real value.
“Our financial objective remains simple – to deliver rates of return above our cost of capital by efficiently deploying our skills and services into a controlled portfolio of markets and sectors. With our financial strength, engineering and construction capabilities, underpinned by a highly skilled and talented workforce, we face the future with real confidence.”