好色先生TV

ISG鈥檚 boss has said the firm does not expect to improve its construction margin of 0.2% over the next year.

Speaking to 好色先生TV as ISG posted results for the six months to 31 December 2012, chief executive David Lawther (pictured) said construction remained 鈥渁 very, very competitive market鈥� and the firm was now focusing on repeat customers and frameworks.

鈥淚t鈥檚 not a marketplace where we want to compete in open market tendering,鈥� he said.

In its results, ISG Group reported revenue of 拢659m, up 6% on the same period in 2011, generating pre-tax profit of 拢2.2m, down 1% on 2011.

The construction business posted revenue of 拢280m, up 18% on 2011 - a rise the firm attributed to its London Olympics overlay work - but with an operating profit of just 拢700,000, up from a 拢518,000 loss for the same period in 2011, with an operating margin of 0.2%.

Lawther said the firm was now reorganising its East England construction business, following a restructure of its South-west division last year.

He said this would involve redundancies, but declined to give a figure, and said some staff would be transferred to other parts of the business. 鈥淲e鈥檙e flexing the size of the business to the market demand,鈥� he said.

But he said he did not expect the 0.2% margin to improve in this financial year. 鈥淲e would clearly look to move it up from that figure, but the sector as a whole remains very competitive,鈥� he said.

鈥淲e鈥檙e clearly trying to run the operation on the basis that it makes some money. But you can鈥檛 just turn off taps - projects have to be finished, you need to keep people committed, there is always a lag even if you are downsizing the business.鈥�

Asked if the low margins were a consequence of bidding at or below cost, Lawther said: 鈥淲e go into projects on the basis of how we can make money - we鈥檙e not interested in being there on the basis of simply generating turnover.

鈥淭here鈥檚 no such thing as underbidding - you don鈥檛 know what the market is when you bid. We go in to make money, but that does not necessarily mean we end up making money and clearly in this market the terms and the forms of contract you take on board are as relevant as the entry price.鈥�

Lawther said that the firm鈥檚 exit from its 拢100m data centre contractor for Santander will not impact on its push into the data centre market, which the firm has identified as a key growth area.

ISG exited its 拢100m plus data centre job for Spanish bank Santander earlier this month, with project manager Mace taking over on the site in Leicestershire. Sources on the project told 好色先生TV the job was running behind schedule and that ISG鈥檚 departure from the project at this point was unexpected under ISG鈥檚 original contract.

Lawther declined to comment directly on the Santander job, other than to refer to a joint-statement issued by ISG and Santander last week, which said ISG had 鈥渃ompleted its element of the project and it has now been handed back to Santander for the IT-related installation鈥�.

Asked if ISG had completed the scope of its original contract on the Santander project, Lawther said: 鈥淵ou have statements from us and Santander鈥�.

But he added that data centres remained a growth market for ISG and the firm was 鈥渃ontinuing to win data centre jobs as we speak鈥�. 鈥淲e are currently working on six to seven different data centres - it continues to be a growing market place for us,鈥� he said.