Support services company Carillion Plc (CLLN.L) Thursday said in its third-quarter update that it continues to perform well and expects to report improved earnings for the full year 2009, despite a challenging market conditions. Carillion shares are currently trading up more than 6% on the London Stock Exchange.
Carillion said its balance sheet remains robust and expects to report cash-backed profit and to reduce net borrowing at the year end to below the half-year level of £146 million.
Support services division, Carillion's largest business segment, will continue to benefit from a public sector business together with the Alfred McAlpine integration cost savings, the company said. Carillion further said the factors are expected to more than offset the effects of increased competition and the pressures from some existing customers in the private sector to reduce absolute costs by reducing the scope of services already outsourced.
Consequently, in the full year the company expects to deliver increased operating profit in this segment. Carillion also said intake of new orders in the second half remains encouraging.
One of Carillion's joint venture has signed a letter of intent with Openreach, BT's local access network business, for a future contract to deliver complex support and network installation services, asset management, maintenance and other associated works, which is expected to be worth about £1.0 billion.
In the Middle East, Carillion said it is on track to increase its share of revenue from the region to around £600 million in 2009, compared with £464 million in 2008. Since the half year, Carillion has secured a £275 million contract for the Majlis, a new Parliament building in Oman.
In construction services division, excluding the Middle East, the company expects overall revenue to increase in 2009, with a small reduction in UK revenue being offset by growth in Canada, reflecting acquisition of the Vanbots Group in October 2008.
CLLN is currently trading at 296.50 pence per share, up 6.54, on the London Stock Exchange.
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