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Carillion awaits Middle East contract flurry
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Sunday, 07 Oct 2012
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Support services and construction firm Carillion is in line for potential contracts in the Middle East worth more than 3 billion pounds in the next 4 months as infrastructure projects in the region show signs of life.

Decisions on many Middle Eastern construction contracts have run into planning delays on large scale developments and financing bottlenecks due to the impact of the eurozone crisis on banks. But Carillion was hopeful of imminent awards.

Mr Richard Howson CEO of Carillion said that "It has been a frustrating year in the Middle East not because the opportunities aren't there but because decisions have been slow which is why we are still optimistic about the region. We are well positioned for a number of large contracts, particularly in Qatar and the United Arab Emirates. The construction sector in Oman was also thriving on increased spending on airport and hospitality infrastructure.

Carillion which maintains some UK railways, roads and military bases, is aiming to double revenue in the Middle East and Canada to around 1 billion pounds each by 2015. So far in the second half of the year it had won 185 million pounds of new and probable orders in the Middle East, a region which generates around 12 percent of group revenue. This compares with 201 million pounds of work in the H1.

Mr Andrew Gibb analyst of Investec retained a Buy rating. The pipeline of contract opportunities remains strong, and the new orders in the Middle East are particularly encouraging. This should reassure some about the improving outlook in the region.

The group is aiming for several private finance school and hospital projects in Canada. In the UK it is shortlisted with Spanish construction firm FCC for a Royal Liverpool Hospital PFI project and facilities management contract worth a total 800 million pounds, due to be awarded by the end of October.

Carillion will also find out this month if it has won a 600 million pound energy saving contract with Birmingham City Council. The value could rise to more than 1 billion pounds if it is extended across the West Midlands.

Sealing this deal would help it prove the rationale of last year's 306.5 million pound acquisition of energy firm Eaga which some analysts considered expensive. The firm estimates the size of the UK energy services market at 22 billion pounds.

Source - Arabian Business.com

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