GEA building ‘P2’ at Lewis Cubitt Square, King’s Cross
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.