Tight cost controls help Laing O’Rourke turn a profit

Despite ongoing challenges and global turmoil, the country’s largest private contractor has managed to get its overheads under control, turn around its fortunes and deliver a pre-tax profit of £18m.

Laing O’Rourke ended the year to March 2024 with revenue up 18% to £4bn and a record order book of £10.8bn.

Cathal O’Rourke, who replaced his father Ray as chief executive in July, said: “I am pleased to confirm a return to profit for our business. This provides stability and a platform on which we can continue to build confidence and resilience.

“The improved results were driven by a refreshed and strategic approach to order acquisition, gross margin recovery and tight control of overhead expenses.

“I am particularly pleased that we continue to win business in our priority sectors across both operational centres – this gives me confidence that we have the right strategy in place to de-risk our portfolio and achieve long-term, sustainable growth.”

During the financial year, particularly in the Europe Hub, earnings before interest and tax before exceptional items recovered to £76m from a loss of £79m previously. Despite the return to profit, net cash fell 3% to £279m.

Laing O’Rourke Shopping Centre
	Income		Profit before tax		Margin op.
	2024	2023	2024	2023	2024	2023
The Center of Europe	£2.5 billion	£2.2 billion	17 million pounds	-168 million pounds	2.7%	-6.8%
Australia’s Center	£1.5 billion	£1.2 billion	40 million pounds	-102 million pounds	3.4%	7.6%

Group operating margins recovered to 1.9% ahead of exceptional provisions of £36m. This included an additional £20m for fire safety work and almost £6m in redundancy payments following a streamlining exercise focused on its European hub.

The Australian Hub has incurred £7m in legal costs in relation to the ongoing dispute over a major Laing O’Rourke contract that has left a hole in its 2023 accounts after a £144m provision was made for work on cryogenic gas tanks at the Ichthys LNG project in Darwin.

O’Rourke added: “The historic contract dispute that we resolved in 2023 remains in arbitration and we expect it to be resolved in mid-2025.”

The company’s auditors warn in their latest reports that the settlement of the claim is still subject to a high degree of uncertainty regarding the estimates.

O’Rourke also announced that group finance director Rowan Baker will leave at the end of this month to take up a role as finance director at a FTSE 250 company.

She will be succeeded by Paul Teasdale, who joined Laing O’Rourke in 2018 from Lendlease, and will be based in the Australia Hub.

Looking ahead, O’Rourke said: “As we seek to build certainty and resilience, we are focusing on six priority sectors in the Europe Hub: healthcare, nuclear and green energy, rail, defence, science and research, and data centres.

“In Australia, our focus remains on defence, rail and road infrastructure, energy and water, as we seek to best utilise our unique skills to address the climate challenges facing the country.”