Carillion's profit drops 15% on flat turnover

Carillion’s pre-tax profit dropped 15% last year despite a strong performance in its construction division.

The construction and support services giant this morning announced profit before tax of £143m for the full year 2011 compared with £168m the previous year.

Turnover was flat over the period, remaining at £5.1bn.

However the group’s construction division, which is being scaled down by around a third this year, performed well with the operating profit for construction services outside of the Middle East rising 28% from £42m to £58m.

Middle East construction services operating profit also increased marginally from £48m in 2010 to £49m last year.

Carillion said a strong order book and record pipeline of contract opportunities would support growth in 2012 despite challenging economic conditions.

Chairman Philip Rogerson said: “Carillion’s integrated UK support services and international business mix has once again enabled the group to perform strongly, despite challenging market conditions.  Given the wider economic outlook, we expect trading conditions to remain challenging in 2012. 

“However, with a strong and resilient business, good revenue visibility and a record pipeline of contract opportunities, we continue to target growth in support services together with the doubling of our revenues in the Middle East and in Canada, in each case to around £1 billion, by 2015.  Consequently, Carillion remains well-positioned to deliver further growth in 2012 and beyond”.

The firm is halfway through cutting hundreds of jobs in its energy services division as part of a restructuring of the unit following its acquisition of Eaga and the government’s decision to slash state subsidies for solar panel schemes, a story first revealed by Building.

New chief executive Richard Howson told Reuters today that headcount in the division is expected to reduce down by around 1,300 from the current level of 4,500.

Shares in the firm dropped 2.2% this morning to 336p.