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Selective bids boost contractors

SELECTIVE TENDERING and diversification helped contractors boost their margins during the first half of this year, according to interim results published over the last week.

On Tuesday Kvaerner Construction reported an operating margin up from 1.5% to 1.6% as the benefits of a more selective tendering policy began to show through.

'The market is not getting better, but our performance is,' said chief executive Keith Clarke. 'We are delivering more work on time and to budget with less mistakes and more innovation.'

Kvaerner Construction made first half pretax profits of £9M on turnover of £621M. Direct comparisons with the first half of last year are impossible because steel fabrication business Cleveland Engineering and the water contracting operation have been moved to other parts of the Kvaerner group.

Selective bidding also helped Costain consolidate last year's return to profit despite one-off reorganisation costs of £2.9M arising from 120 job cuts (NCE 15 April).

First-half pre-tax profits were £200,000 compared to a £1M loss for the same period last year. Turnover fell from £200M to £197M.

Balfour Beatty's operating profits were hit by the £1.2M fine for its part in the 1996 Heathrow Express tunnel collapse (NCE 18 February). The contractor also paid £3M to its pension fund after changes in the Government's pensions policy.

But the engineering and construction business still increased operating profits from £35M last year to £36M, while turnover was static at just over £1bn. Balfour Beatty parent BICC reported a pre-tax loss of £392M in the first half, compared with a pre-tax profit of £19M a year earlier. Group turnover fell from £2bn to £1.6bn.

Property development boosted Miller's first half profits. Pre-tax profits rose from £4.7M this time last year to £6.3M, while turnover increased from £174M to £206M. But construction profits plunged from £890,000 in the first half of last year to £163,000. Turnover rose from £125M to £138M.

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