LONDON (ShareCast) - Construction group Carillion anticipates its total revenue for 2014 will be similar to the £4.1bn delivered in 2013, due mainly to a reduction in revenue from public-private partnerships (PPP).
However, it said that despite continued challenging market conditions, it had seen further signs of improvement, which "indicate that the medium-term outlook remains positive".

"By remaining very selective in terms of the projects for which we bid, we expect to maintain the group's operating margin at a broadly similar level to that in 2013, despite the fact that most of the work we are delivering in 2014 was won during the economic downturn," it continued.

Profit for the year is expected to be cash-backed, with underlying net debt decreasing in line with expectations.

The company said its new order intake had remained strong, with year-to-date contracts totalling £4.6bn.

Divisionally, support services is set to deliver a marginal increase in revenue, representing underlying growth of around 4%. The operating margin is expected to increase, thanks to cost savings and its selective approach to contract bidding.

Its PPP projects portfolio performed in line with its expectations, while its Middle East construction services business is expected to deliver strong revenue growth. The operating margin is also expected to grow, and could improve further if it continues to see a better balance between supply and demand, it said.

Construction services outside of the Middle East will report revenue similar to that achieved in 2013, with growth in UK construction services offset by a reduction in revenue in Canada, which is partly due to the movement in the exchange rate.

Looking ahead, the group said: "Although our markets remain challenging, we continue to have a strong, high quality order book and a substantial pipeline of contract opportunities, consistent with the selective approach we take to choosing the contracts for which we bid.

"We expect the steady improvement in our markets that began in 2014 to continue in 2015, subject to a sustained macro-economic recovery. Overall, the group therefore continues to be well positioned to make further progress over the medium term."

The share price had dropped 0.17% to 345.42p by 09:55.

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