Saudi market tempting for UK giant Carillion

KSA is a tempting proposition for UK giant Carillion. Photo: Getty.

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British construction firm Carillion is considering a future entry into the lucrative Saudi market, although its plans are still at an initial stage.

John Denning, Carillion’s director of group corporate affairs, told Arabian Business: “We are at the feasibility study stage, and we haven’t got as far thinking about a potential partner yet.”

He added: “It is probably a year or two away, because you need to tread very carefully when entering any new market. But we are looking in the process of looking at Saudi, and of course one would eventually need a partner to operate in the country.

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Denning said that Saudi Arabia’s massive infrastructure budgets, such as the $385bn budget announced last week, had been noticed by his firm.

Denning added: "The key thing is our reputation is as good as it gets in the region. We have been present in the market for 40 years and have well established businesses in the UAE and Oman. While Saudi Arabia is a little further towards the horizon, we’re definitely interested in flagging the country as an area of interest for us."

Carillion is already present in three GCC states via a series of joint ventures.

In the UAE, Al Futtaim Carillion won several projects in the first half, including an $885 million New York University deal, a $124 million contract to build the UAE University and a $41 million deal to build an IKEA store in Abu Dhabi.

The firm’s Omani joint venture, Carillion Alawi, has been operating in the country since 1965, and the contractor has also started work in Qatar.

In its first half results, Carillion said that first-half underlying pretax profit had risen by seven percent, although revenues had slipped by 11 percent on the same period a year earlier.

The firm said that its Middle East businesses had performed in line with expectations “with revenue and profit weighted towards the second half, due to the timing of project starts and completions”.

In a statement Carillion said: “We expect the overall operating margin for these businesses to be similar to the 7.7 per cent achieved in the first half of 2009 and therefore significantly ahead of our original target of at least six per cent, as we continue to benefit from contracts that were secured on negotiated terms."