FY17 Group Financial Results Released05.03.18
Laing O'Rourke FY17 (End March 2017) Annual Review confirms successful turnaround with strong profit forecast
The Board of Laing O’Rourke met on Friday to review Financial Year 2017 (‘FY17’) performance and the outlook for FY18, and to sign the financial accounts for the year to 31 March 2017.
The Board was pleased to note that FY17 showed substantial improvement in UK performance, with the international engineering, construction and manufacturing group recording an underlying profit.
A successful turnaround programme, initiated in FY16, now sees Laing O’Rourke projecting a further material improvement in profitability (and cash generation) for the current year to 31 March 2018.
This robust profit outlook is underpinned with a current order book that exceeds £10 billion (globally) in secured and anticipated work, reflecting the strength of Laing O’Rourke’s competitive positioning in the marketplace and its investments in industry-leading technology.
The accounts set out the improved performance of the 2017 financial year, where:
- The Group recorded an underlying profit of £35m (FY2016: loss of £82m) (profit before exceptional and joint venture results) driven by a return to profitability in the core UK market;
- Continuing losses from joint ventures of £86.2m were incurred, of which £83.2m was on phase one of the CHUM hospital JV, completed in October 2017; and
- The reported result for the year was a loss after tax of £60.6m (including JV losses), a significant improvement on the £219.9m loss reported last year.
Laing O’Rourke increased its FY17 turnover in both the Europe and Australia Hubs.
Subsequent to year-end Laing O’Rourke has continued to dispose of certain underperforming assets and investments and has taken further steps to reduce its remaining CHUM Hospital JV exposure in Canada.
Comments from Group Chief Executive Ray O’Rourke:
“The Group has responded strongly to recent challenges, not only by restructuring the UK business, but also through new processes and controls on project selection, operational delivery, digital data and risk and assurance.
“We have set a new strategic mission and are absolutely aligned with the UK Government’s Industrial Strategy, which calls for construction to demonstrate productivity in-line with the aviation and automotive engineering sectors by 2025. Indeed, our aim is to outperform that timetable, with our ongoing investments in advanced manufacturing leading a step-change in safety, quality safety and efficiency.
“The market is already responding to our DfMA 70:60:30* offsite manufacturing capability in a remarkable way, and we have a series of negotiated projects now in our robust and growing global pipeline.
“It has been a difficult time for our sector, and recent events have only reinforced the importance of Laing O’Rourke’s early actions to redefine the business. Our leadership team across the Group has been steadfast and their achievements remarkable.
“I take this opportunity to thank our lender group and all of our stakeholders – including clients, subcontractors and supply chain partners – as well as our supporters in government and the media, for their encouragement while we completed this significant transformation.
“We will continue to build on this momentum, backed by recent high-profile project wins, to become the recognised leader for innovation and excellence in the construction industry."
The outlook for the current financial year ending 31 March 2018 (FY18) shows significant further progress and, having de-risked the CHUM project in Canada, the Group anticipates further profitable growth and increased cash generation.
The Group annual review is available to read in full here.
*DfMA 70:60:30 – Laing O’Rourke’s proven offsite delivery methodology where 70 per cent of the construction is completed offsite, leading to a 60 per cent improvement in productivity and a 30 per cent improvement in the delivery schedule.