Contractor reports increased margins in construction and support services in first half of the year, with profit up 5%

Birmingham Library built by Carillion and designed by Menacoo

Carillion has reported a 5% rise in its pre-tax profit in the first half of the year, although the firm鈥檚 revenue dipped by 5% to 拢1.87bn.

In a statement to the City this morning, the firm reported a pre-tax profit of 拢67.5m in the six months to 30 June 2014, up from 拢64.2m in the first half of last year.

However, it also reported a 5% dip in revenue to 拢1.87bn, down from 拢1.96bn.

Carillion鈥檚 profit was boosted by improved margins across its construction and support services businesses.

Its underlying operating margin for construction services, excluding the Middle East, rose to 4.2%, up from 3.8%. The Middle East construction services division also reported an increase in underlying operating margin to 6.2%, up from 4.5%.

Carillion鈥檚 support services underlying profit margin increased to 5%, up from 4%, and the total group underlying operating margin increased to 5.5%, up from 5.1%.

The firm also reported an increase in its order book, which stood at 拢19.5bn of orders and probable orders at the end of June, up from 拢18m at the end of 2013.

Carillion chair Philip Green said the results 鈥渞eflected the benefits of the early actions we took in response to the economic downturn, notably the planned rescaling of our UK construction business鈥�.

He added: 鈥淗aving realigned our businesses to the size of the markets in which we operate, the group is well positioned to benefit from its strong work-winning performance over the last 18 months and from its high-quality pipeline of contract opportunities across our target markets.鈥�

Green said the board expected 鈥渇urther progress in the medium term鈥�.

Stephen Rawlinson, analyst at Whitman Howard, said the results signalled that 鈥渢he business has turned the corner鈥�.

He said: 鈥淐arillion has maintained its view that its markets remain challenging but it will still hit the current full year expectation.

鈥淐arillion is in a good position in our view. It has won a considerable amount of work, over 拢8bn of new contracts and renewals in the last 18 months and has started to make serious inroads into reducing its debt.鈥�

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