Laing O’Rourke has reversed the losses it made in 2017/18 to generate earnings before interest and tax (EBIT) of £47.2m in the year to 31 March 2019.
The £74.2m improvement in EBIT from a £27.5m loss the previous year, on revenue of £3.3bn, came despite what chairman Sir John Parker described as UK construction’s “troubled state”, which has seen key lending banks exit the sector.
Laing O’Rourke’s “Europe hub” (UK, Middle East and Canada) improved its EBIT to £76.1m, while the Australian business contributed a further £1.9m in EBIT. The company’s return to profit came in part thanks to the fact that losses from its Canadian hospital PFI have now ceased. In February this year, Laing O’Rourke revealed that the Centre Hospitalier de l’Université de Montréal (CHUM) project, delivered in joint venture with Spanish contractor OHL, had cost it more than £200m.
Meanwhile, the group had an order book of £7.6bn and declared that it had “insulated its operations against Brexit” via detailed scenario and contingency plans, with plans in place for talent and skills retention, labour availability and plant and equipment imports.
Looking ahead to its 2020 trading year, Laing O’Rourke revealed that its half-year EBIT for the UK was forecast at £39.6m, while it was achieving gross margin of 7.6% across the portfolio.
Chief executive Ray O’Rourke said: “Knowing how hard our people have worked in the past year, I am pleased to present a review that acknowledges the value of their dedication and business acumen.
‘Ongoing market uncertainty’
“As promised, Laing O’Rourke continues to address the challenges of ongoing market uncertainty and resulting hesitancy in both the public and private sectors. We remain committed to the core conditions that will help us lead a very different construction industry.
“It should be clear that Laing O’Rourke is dedicated to navigating the real challenges of the present while progressing fundamental change in our company, and indeed the industry as a whole. We are continually grateful to our clients, suppliers and other stakeholders whose support has provided us with enormous opportunities, despite the complex times.”
Sir John Parker added: “UK construction remains in a troubled state. A number of key lending banks have signalled their exit from the sector; thankfully a few remain committed. The livelihood of some three million UK employees and the well-being of those who support and depend upon them must be secured.
"The country’s sustainable economic recovery and the vital need to renew our infrastructure requires the driving force of a modern and successful construction sector. There is now a crucial opportunity for the public sector to reform procurement processes and modernise commercial models. This can reset the ‘tone from the top’ within the industry and its broader customer base. At the same time, construction can no longer be driven by old standards and outmoded thinking. That is why we as a Board enthusiastically support the ongoing innovative and transformational agenda of Laing O’Rourke.”
