Category: UK Construction News

UK Construction News

The latest UK construction news shows that Carillion improves offer for rival Balfour Beatty

UK construction firm Carillion has sweetened its takeover offer for rival Balfour Beatty, arguing there is ‘powerful strategic logic’ in a merger.

It comes as Carillion announces a 5% rise in pre-tax profits for the six months to the end of June to £67.5m compared with £64.2m a year earlier.

Carillion said it had held meetings with shareholders since 11 August, when its second offer was rejected.

It has offered an extra cash dividend of 8.5p per share to shareholders.

It also said a merger would save both companies £1.5bn and reduce the cost base of the combined group by at least £175m a year by the end of 2016.

‘Financial benefits’

On Monday, Balfour Beatty said it had swung back into profit, making £1m for the six months to the end of June, compared with losses of £4m for the same period a year earlier.

Carillion said on Thursday it “continues to believe in the powerful strategic logic and financial benefits of a merger with Balfour Beatty and is therefore continuing to consider its position.”

According to reports, one roadblock to the deal is Carillion’s desire to cancel Balfour’s planned £200m sale of its US business Parsons Brinckerhoff.

Balfour Beatty shares rose 1.48% to 240p, Carillion shares rose 2.22% to 327.10p.

[BBC News]

UK construction output rise 2.2% driven by housebuilding

Rise in construction output likely to add an extra 0.1 percentage points to third quarter GDP, says ONS

UK construction output grew solidly in October, led by the biggest rise in housebuilding in more than two years.

An upward revision to construction output in the three months to September is also likely to add an extra 0.1 percentage points to third quarter gross domestic product growth, the Office for National Statistics said.

Construction output rose 2.2pc on the month in October after a fall of 0.5pc in September. On the year, output is up 5.3pc, slowing from an 8.2pc increase in September, which was the biggest since January 2011.

This marks a big turnaround from 2012, when construction output fell by 7.5pc and was a major drag on overall growth, despite its small share of just over 6pc of the economy.

Separate private-sector surveys had reported the biggest expansion in construction activity in over six years in October and November, and Friday’s official data also suggest the sector will make a strong contribution to overall economic output.

Britain’s economy grew by 0.8pc in the three months to September, the strongest quarterly growth in three years, according to an early estimate, and further revisions will be published on December 20.

The turnaround in construction this year is down to a marked revival in house-building, driven by a government scheme to aid buyers of new homes and a rebound in house prices, which are up nearly 8pc on the year according to mortgage lender Halifax.

This is the biggest rise in over six years, and fears of a possible bubble prompted the Bank of England late last month to announce it would scrap the part of its Funding for Lending Scheme that supports mortgage lending.

But this alone is unlikely to stop further rises in house prices. The government expanded another scheme to help home-buyers with low deposits in October, and in a set of economic forecasts last week it predicted that house prices would rise by a further 5pc next year and by 7pc in 2015.

The ONS said that new housing grew by an annual 18.6pc in October, the biggest rise since January 2011.

However overall construction levels remain well below those seen before the crisis, and what economists think is needed to meet demand.

Just 135,000 homes were built in the year to April 2013, down from the more than 200,000 homes a year that were built in the years running up to the financial crisis, government figures show.

Most other construction sectors have yet to return to solid growth. Infrastructure building is 2.8pc lower than last year, public building works are down by 6.8pc and private industrial work is 26.0pc lower. Private commercial work is growing at an annual rate of 8.7pc, however.

The government’s Office for Budget Responsibility predicts a pick-up in business investment next year, and last week the government also said that insurers were willing to commit £25bn to long-term infrastructure projects.