BALFOUR BEATTY PLC LONDON (Reuters) - British support services company Carillion (>> Carillion plc) expects a slowdown in government contracts awarded ahead of next year's national election, it said after lowering its revenue expectations on Wednesday.
The company, which maintains British railways, roads and military bases, said it expects government departments to curb their spending ahead of the election, which would result in a slowdown in work for outsourcers.
"One of our biggest customers is the UK government and we are entering into an election year where they typically spend less money than they do in the intervening period," CEO Richard Howson told Reuters.
Carillion has profited over the past few years as tighter government budgets have prompted more outsourcing of work to cut costs. It has also avoided scandals that have hit rivals such as Serco (>> Serco Group plc) and G4S (>> G4S plc).
Howson declined to comment on recent speculation that it may launch a second takeover approach for construction company Balfour Beatty (>> Balfour Beatty plc) but said Carillion is focussed on like-for-like growth and small bolt-on acquisitions.
"We've won a lot of work ... We are winning more than we are consuming in the year, so we are growing and I think that is a great place to be," he said.
The company said it expects 2014 revenue to be similar to last year's, having previously predicted income growth.
Market conditions remain challenging despite securing 4.6 billion pounds of new contracts in the first half of the year, it said, adding that its medium-term outlook is positive.
"There is no change to our outlook, so we will grow our revenue next year on the back of work that we have won last year and this year. Our ambition is to hold the margin at the level that it has been for the last two years, which is a strong margin for our sector," Howson said.
Carillion expects the group's order book at year-end to be total more than 18.5 billion pounds with a bid pipeline worth a potential 39 billion pounds.
Shares in the company were broadly flat at 345 pence by 10:07 a.m..
(Editing by David Goodman)
By Li-mei Hoang
