Some of the more
heavily indebted major contractors such as Kier Group and Interserve have been
in the spotlight recently as they have come under pressure to refinance their
borrowings.
But new year trading
statements from major quoted contractors suggest the industry’s largest
companies are in good shape for 2019 and are taking advantage of some promising
markets.
Costain said it
continued to perform well in the second half and it ended 2018 with a record
order book worth £4.2 billion, up from £3.9 billion a year earlier. It is also
preferred bidder on work worth a further £600 million.
The company is
benefiting from a trend for major clients to consolidate their supply chains on
large, multi-billion-pound investment programmes – often driven by regulatory
commitments. Costain is working on AMP6 five-year programmes for Thames Water,
Severn Trent and Southern Water and has a significant workload with Highways
England.
Styling itself the
‘UK's leading smart infrastructure solutions company’, Costain is cultivating
long-term strategic relationships and integrated technology services which meet
what it says are increasingly complex and fast-changing client needs.
Glenigan
Construction data reflects the company’s progress. It shows Costain has
recently won two significant Highways England projects due to start early next
year; a £150 million scheme of junction improvements on the A19 at North
Shields (Glenigan Project ID: 17183309) and a £130 million junction/flyover at
the A19/A184 in Newcastle (Glenigan Project ID: 04205891).
Kier Group might
have parted company with its chief executive recently and been obliged to raise
£250 million through an urgent rights issue but its underlying trading remains
good. In a new year update the firm said its infrastructure services and buildings
business had an order book worth more than £10 billion.
Kier has won over
£500 million of regional building contracts in November and December, including
a major Argent office scheme in King’s Cross and a research facility for the
Pirbright Institute in Surrey. It has also won a three year £70 million utilities
services contract in the South West and has been appointed to three lots on the
£1.5 billion, three year North West Construction Hub.
The message from
Balfour Beatty is also upbeat. Just before Christmas, the company said its
year-end construction order book stood at around £12 billion, up from £11.4
billion at the end of 2017.
It expected to reach
‘industry-standard’ margins of 2-3% this year.
One good market for
the firm on the support services side has been road maintenance. Balfour Beatty
has recently won a seven year, £103 million contract from Telford and Wrekin
Council to maintain its highways assets.
Health could also
provide a promising source of new construction work for the group in 2019.
Glenigan Construction data shows that the company is the ‘site enablement’
contractor on one of the prize projects in the sector this year; the £400
Midland Metropolitan Hospital in Birmingham where work is set to start this
autumn (Glenigan Project ID: 18233050). Balfour is bidding for the main
contract in competition with Kier Construction, Laing O’Rourke and Sir Robert
McAlpine.
Elsewhere, Henry
Boot said earlier this month that its construction activity had held up well
and it had started the year with a strong committed order book and expected to
agree a number of contracts in the first half of 2019.
