Carillion Cautious on Oman Expansion Because of Oil Market RoutJoe Mayes
Carillion Plc, the British construction services company, said plunging oil prices may hamper its plans to expand further into Gulf states such as Oman.
“I’m watching Oman with interest,” Chief Executive Officer Richard Howson said in an interview Wednesday, after the company reported rising first-half sales and profits. “It has more exposure to the oil price than perhaps the other countries in which we trade in the Middle East.”
Oil prices have more than halved since last year and Oman is the biggest Middle East producer outside OPEC. Revenue from the country made up 45 percent of Carillion’s Middle East sales in 2014, Liberum analyst Joe Brent wrote in a note.
The Wolverhampton, England-based company employs more than 46,000 people worldwide and has been expanding in the Middle East, winning construction contracts for Dubai’s World Expo in 2020 and a service agreement to manage Royal Dutch Shell’s estate in Qatar. The region accounted for 14 percent of Carillion’s first-half sales, according to its earnings statement Wednesday, up from 5 percent three years ago.
The company said it was on track to achieve full-year revenue growth, while profit would meet expectations, because of an “exceptional” volume of new contracts last year. Sales rose 21 percent to 2.26 billion pounds ($3.5 billion), and underlying pretax profit increased 11 percent to 84.5 million pounds.
The shares were trading 2.9 percent lower at 322.9 pence at 11:11 a.m. in London.
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