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Contractors' earnings hit £12bn as market soars

CONTRACTORS earned a massive £12bn last year, exclusive research by NCE has revealed this week.

Financial results provided by 131 top civil engineering contractors for the 2006 NCE Contractors File reveal a market in good health, with turnover up £2bn on 2004 and £6bn on 2000.

The buoyant market shows no sign of sinking either, with contractors reporting order books totalling £19.6bn - up on the £18.3bn declared last year.

More than £14bn of this is with the Top 10 firms, highlighting a growing polarisation in the market that is triggering a rash of mergers and acquisitions, for example, Carillion's recent takeover of Mowlem, Balfour Beatty's acquisition of Birse and Galliford Try's purchase of Morrison.

'We are moving towards a market where there are a handful of super contractors, very little in the middle, and then the regional players, ' says one medium contractor.

'To be cut adrift in the middle you are eventually not going to win the bigger contracts on economies of scale. We're going to have to accelerate.'

Despite the increase in turnover, margins remain low - the top 20 rms averaged a margin of 3.1% in 2005. But 45% of fims expect to secure margins in excess of 5% in the next two years. Roads are the biggest growth sector, followed by buildings and water and wastewater.

Balfour Beatty remains the biggest civil engineering contractor, with a turnover of £1.5bn. It also has more work in hand than the next two firms (Costain and Nuttall) combined.

Laing O'Rourke made more money from airports last year than all other civil engineering contractors combined.

See Contractors File supplement free with this week's issue.

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