Carillion looking at increased profit as it wins new project
By Josh White
Date: Wednesday 07 Dec 2016
(ShareCast News) - Carillion provided an update on trading in 2016 on Wednesday, ahead of announcing its preliminary results on 1 March.
The FTSE 250 firm said performance met expectations, and it expected strong growth in total revenue and increased operating profit.
It said performance continued to be led by revenue growth and a strong margin in support services, and it expected net borrowing to reduce from the half year level.
New orders plus probable orders in 2016 were expected to reach £4.5bn, with total orders plus probable orders of approximately £16bn by the year end, down from £17.4bn at the same time last year.
Visibility of revenue from framework contracts was expected to be around £1.5bn, and revenue visibility for 2017 was anticipated to be around 70%, down from 84%.
Carillion's pipeline of specific contract opportunities remained broadly unchanged at over £41bn.
"Given the strength of our order book, framework contracts and pipeline of contract opportunities, we believe we are well positioned to make further progress in 2017," the board said in a statement.
"We will continue to be selective in terms of the contracts for which we bid and adapt to trends in our geographies and key markets, in order to focus on new or growing opportunities, such as those we expect in our infrastructure services markets, both in the UK, and in Canada."
As a result, Carillion said it expects the proportion of our total revenue and operating profit from our support services activities to continue increasing, and for this to more than offset a further reduction in operating profit in PPP projects, because the contribution from selling equity investments will again be lower in 2017.
"Delivering strong cash flow remains a key objective and our ambition over the medium term is to reduce net borrowing, while continuing to invest to support the development of the business."
In a separate announcement, Carillion said its Canadian subsidiary Rokstad has been selected by Manitoba Hydro as the preferred provider for the next phase of its Bipole lll high-voltage transmission line project, which has an estimated revenue value of £120m.
The project involves clearing rights of way, the installation of access roads, foundations and anchors, the assembly of towers and the stringing of cables for three packages of the Bipole lll project, which includes 1,384 km of transmission lines and two converter stations, starting at Keewatinohk in Northern Manitoba and ending at Sandy Bay Ojiway First Nation in Southern Manitoba.
When the whole Bipole lll project is completed, Carillion said it will deliver renewable energy to Southern Manitoba and to the United States.
It expects to agree final terms and achieve contract signature shortly to enable work to begin before the end of the year, with completion scheduled for 2018.
"We are delighted to have been selected for this important project, which further demonstrates the quality and strength of Rokstad's offering and the success of our strategy of expanding our infrastructure services activities in Canada into the power transmission and distribution market, with the acquisition of Rokstad in 2014," said group chief executive Richard Howson.
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