Kvaerner Construction preliminary results 1999

Press release 22/02/2000 00:00 CET

Kvaerner Construction this week announced its third consecutive year of improving results with significant increases in both profit and turnover.

The results also show a steady increase in the margin on sales against a slightly reduced order book, confirming that the company’s strategy to boost profitability, introduced four years ago, is proving successful.

Turnover has increased by 10% to £ 1.3 billion (1998: £1.2 billion) with operating profit increasing by nearly 100% to £18 million (1998: £9 million). Profit before tax and goodwill shows a 52% increase to £27.3 million (1998: £18.0 million). Although the order book was slightly down at £1.5 billion (1998: £1.6 billion), the margin on sales continued its steady increase at 2.1% from 1.5% in 1998.

Kvaerner Construction’s chief executive, Keith Clarke, said: “Four years ago we introduced a turnaround strategy of selective bidding and niche market focusing, combined with a drive to improve performance at operational level. Today’s figures are the result of the hard work we have put into this change of emphasis and we will continue to pursue this strategy. We like construction; we do it well; we have focus and direction; and we will continue to identify and build on our strengths.

“We are actively supporting the UK government’s ‘Movement for Innovation’. We are represented on the board, have a number of staff working there on secondment and now have seven sites accepted as demonstration projects. The industry as a whole is changing and this is a good forum for encouraging these changes.

“Kvaerner Construction’s focus for 2000 is to continue to choose the work we win and to improve performance – it is performance that counts in our bid for sustained profitability.”

During 1999, UK Civils increasingly introduced partnering into its business with approximately 80% of all its contracts now run with either informal or formal partnering agreements. The success of this strategy is supported by the early completion of both the M1/A1 and the Dudley Southern Bypass.

UK Building continues to excel in the PFI design and build sector. During the year it completed three prison contracts and won a fourth, Moreton Prison in East Staffordshire. Worth £69 million, it is Kvaerner Construction’s largest prison contract to date. Work is progressing steadily on the Queen Elizabeth Hospital in south London; Chepstow Community Hospital in Wales was handed over last week (February 15) and Kvaerner Construction is one of two shortlisted for Dudley Hospital. It is also the Preferred Bidder for the refurbishment of the Ministry of Defence buildings in Whitehall, central London and Canterbury College in Kent.

In the commercial building market, significant projects were won in London, Edinburgh and Bournemouth.

Kvaerner Construction’s international business, with its concentration in three market areas (Egypt, India and the UAE) where it already has a number of substantial contracts, has seen a return to profitability. With its sister company, Kvaerner E & C, it started work on a major Liquid Natural Gas (LNG) facility for Enron in Dabhol and has received independent certification for its design concept for highly- dependable low-cost concrete LNG tanks giving it a foothold in this niche market area.

In Hong Kong, Gammon Construction won a number of substantial contracts, including a £62.5 million contract for five 41-storey residential towers for the Hong Kong Housing Authority, the £60.5 million North Coast Road extension, the £48 million Eastern Harbour extension for MTRC and a ground engineering contract for a new MTRC depot worth £31 million.

In the specialist businesses Kvaerner Cementation and Kvaerner Cementation Foundations have achieved Investors in People. Kvaerner Cementation Foundations has also been particularly innovative in using IT to enhance its operational performance. To support the complexities of deep basement work on an inner London site it introduced a bespoke programme, called Surpoint+, for which it won an IT award. This was followed by the introduction of NewBest, a bespoke system for streamlining estimating.

Kvaerner Rashleigh Weatherfoil has increased its activities in PFI. It has carried out all the M & E on Kvaerner Construction’s prison contracts, has major M & E and Facilities Management contracts on the QE Hospital and, as joint venture partner with Kvaerner Construction, is Preferred Contractor for the refurbishment of the Ministry of Defence’s Whitehall offices in central London.


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