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Strong trading pushes up Kvaerner's results

KVAERNER CONSTRUCTION'S order book is showing 'no signs of recession', chief executive Keith Clarke claimed this week.

Clarke was speaking as Kvaerner's construction arm reported pretax profits for 1998 of £12.9M, up 50% from last year. Turnover rose 17% to £1.42bn.

The encouraging results were in contrast to those posted by parent Kvaerner Group. These were described by new president and chief executive Kjell Almskog as reflecting 'a very negative development of Kvaerner's operation in 1998'.

According to Clarke, 1998 saw strong trading for construction in both the UK and overseas markets.

He claimed this strong performance was likely to continue: 'Our current order book and continued bidding activities show no sign of recession,' he said. Orders are up 9% to £1.78bn, with about 80% of 1999 work in hand, he added.

However, Clarke added that the export-driven Cleveland Bridge steel fabrication business continued to suffer from a strong pound. The business culled 100 jobs last month in an attempt to stem losses.

He said Cleveland was now 'moving aggressively' into the structural market and had been recruiting for this new market.

Clarke admitted that the construction division's current margins of 0.9% were disappointing, despite being substantially reduced by goodwill deductions of about £8M a year resulting from the 1996 purchase of Trafalgar House. Raising margins toward the 2% mark was achievable, he said.

'We are only doing work that we want to do. We have held our nerve on lots of tenders and not dropped our price to win work,' said Clarke.

Overseas, he added, orders remained strong with Kvaerner poised to start work on big bridges in Turkey and Canada. In Hong Kong, he said, tender prices were bouncing back from the low point which saw West Rail contracts let 30% lower than expected.

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