By Li-mei Hoang
LONDON (Reuters) - British support services company Carillion (L:CLLN) will target the public sector to drive growth in its business in the coming year after reporting worse than expected full-year profit on Wednesday.
The company, which has won 10 billion pounds of work in the past two years, said it plans to focus on opportunities offered by Britain's defence and health sectors, where it secured a number of significant contracts among last year's 5.1 billion pounds of new contracts.
"I think markets are steadily improving, (but) it's still challenging," Chief Executive Richard Howson told Reuters. "Despite that, we still believe there are opportunities to win further large contracts with the UK government."
The company announced that it had secured a 1.5 billion pound six-year contract to provide facilities management for public sector outsourcing services business Scape Group.
Carillion, which maintains British railways, roads and military bases, posted pretax profit up nearly 29 percent to 142.6 million pounds in the year to Dec. 31. That compares with an average forecast of close to 174 million pounds in a Reuters poll of 10 analysts.
It also reported revenue unchanged from 2013 at 4.1 billion pounds and proposed a full-year dividend up 1 percent to 17.75 pence.
Howson said Carillion, which makes 73 percent of its revenue in Britain, will also look to boost overseas income, echoing comments by his counterpart at rival Capita (L:CPI) last month.
Those efforts will focus on infrastructure services in Canada and construction in the Middle East, which are seeing strong demand, Howson said.
He declined to comment on whether the company would make a second bid for rival Balfour Beatty (L:BALF) after takeover panel restrictions were lifted at the end of last month.
However, a 9.9 million pound charge against costs related to what the company described as the aborted merger discussions with Balfour and its recent acquisition of Canadian energy business Rokstad, suggest that Carillion has moved on.
"We were not expecting the charge for Balfour to be booked last year, and by referring to the discussions as aborted, there is an air of finality, which is new," Whitman Howard analyst Stephen Rawlinson said.
Shares in Carillion rose 0.7 percent to 360 pence by 9.29 a.m.