Monday 24 September 2018

Laing O'Rourke cuts losses amid debt talks with lenders

Contract wins help bolster builder's turnaround aims

Laing O’Rourke chief executive Ray O’Rourke. Picture: Jonathan Goldberg
Laing O’Rourke chief executive Ray O’Rourke. Picture: Jonathan Goldberg

John Reynolds

Irish-owned, UK-based construction and engineering giant Laing O'Rourke has announced a €39m underlying profit in its latest accounts based on €4.26bn of revenue for the 12 months to March 2017.

The accounts revealed a €10bn order book, and confirmed that the company remains in talks with a number of banks including HSBC over its debt arrangements. A refinancing exercise will be completed by June, it says.

However, the accounts also stated that the firm - Britain's largest privately owned building giant - has €215m of borrowings, the bulk of which is a standard revolving credit facility. CEO Ray O'Rourke has also loaned the business €32m.

When joint venture losses were taken into account, an after-tax loss of €68m was booked, a significant improvement on the €290m loss it reported in its 2016 accounts, while the underlying profit is an improvement of €131m on the previous year.

The figures emerged after the firm - which employs over 11,000 people - pulled out of a £1.7bn joint venture to redevelop London's Euston Station.

However, the firm also announced this week that its Australian arm, run by Ray's son Cathal, has won a €600m contract to renew Sydney's Central Station. In addition, in the past two months, it has also announced a €150m project in Dubai, on buildings and infrastructure for its 2020 World Expo, and a joint venture with two housebuilders to build 550 new homes in West London. Late last year it won a £1bn new contract for work at Manchester Airport.

In an interview last November, O'Rourke - who founded the company in 1977 with his brother Des - said that he expected further growth and improved profitability in the business this year.

Sir John Parker, a fellow engineer and former CEO of Harland and Wolff in his native Belfast has been brought in to chair the business.

But its recent challenges also incurred substantial costs of €39m in consultancy and refinancing fees and redundancies in 2016 and 2017.

"The business 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," said Ray O'Rourke.

"It has been a difficult time for our sector, but we will continue to build on this momentum, backed by recent high-profile project wins and a growing pipeline of work."

Sunday Indo Business

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