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Carillion expects big increase in profits

Contractor Carillion expects its pre-tax 2012 profits to “increase substantially” following a rescaling of its UK construction operations, the firm’s trading update said today.

Carillion said revenue in 2012 will be lower compared to 2011, but the firm’s operating margin is expected to increase as the “overall quality of our business continues to improve”.

The firm’s construction services division - excluding the Middle East - rescaling announced in May 2010 will be largely completed this year. Carillion is increasing its profit margins through “highly selective bidding” and focusing on large, high-quality contracts for long-term customers.

Recent contract wins since its trading statement in August include confirmation Carillion will deliver, in a joint venture, the A1(M) upgrade between Leeming and Barton and the A5-M1 link road scheme which combined is worth £200M to the firm.

The firm’s support services division continues to grow. Highlights include reaching financial close on an energy services contract for Birmingham City Council worth up to £1.5bn over eight years and securing preferred bidder status on a Canadian highways maintenance contract worth £525M over 12 years.

The firm also announced today it has bought a 49 percent stake in Canadian support services firm Bouchier for £24M.

The firm will said it expects to deliver a “robust financial performance” when it produces its preliminary full year results on 27 February 2013.

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