'Historic turbulence' in construction delays Laing O'Rourke results
Chief executive Ray O'Rourke said the contractor was "disappointed to have been defeated by process"
UK construction contractor Laing O’Rourke, which has worked on major projects in the UAE, is delaying its 2017-18 annual report due to delays caused by “historic turbulence” in the building sector. This development comes despite Laing O’Rourke staying on course with its business plans for 2018, including the insulation of “its UK businesses against Brexit uncertainty”.
Ray O’Rourke, chief executive of Laing O’Rourke, said the company was “disappointed to have been defeated by process, with the FY18 accounts delayed”, adding that the construction industry being “starved of oxygen” due to internal and external pressures was “a tragedy”.
In a statement, the contractor – which has worked on Al Bandar and Aldar Headquarters in Abu Dhabi, and Atlantis, The Palm in Dubai – said its “business turnaround is complete”, but its FY18 report could not be filed “until Christmas at the earliest”.
“Despite the delay to sign-off and publication, Laing O’Rourke continued its successful strategic plans in FY18 – and will post a profit for both its UK operations, and globally,” the statement continued.
The global construction sector has seen some upheaval in 2018, including, as Laing O’Rourke’s statement said, “the collapse of a number of companies, large and small”. This environment has, in turn, affected “the approach of banks, insurers, regulators, and auditors”, according to the contractor, which said: “[These conditions] will ultimately prevent Laing O’Rourke closing out its formal statements in the coming weeks.”
Laing O’Rourke’s 2019 prospects are positive, and in the UK alone, 100% of its revenue for 2019 is under contract. This figure stands at 70% for 2020. Moreover, cost reduction measures launched three years ago are continuing and “exceeding targets” at Laing O’Rourke. Globally, the company has almost $11bn in secured and anticipated work, which appears to include projects in the UAE with a GBP to AED exchange rate of 4.73.
Moreover, the contractor now has an outline agreement with its “primary banking partners” to refinance its UK businesses. Laing O’Rourke’s Australian companies saw the completion of a refinancing operation in mid-2018.
In the statement, O’Rourke added: “Our industry has witnessed the demise of a number of companies and the withdrawal of significant funding this year. This has put enormous pressure on parties across the sector, and slowed down all regulatory, financial and administrative processes.
“Three million jobs in the UK rely on construction, and we have nation-building infrastructure to deliver. It is a tragedy to see the industry starved of oxygen like this.”
Laing O’Rourke Middle East, the British contractor’s regional unit, is one of the UAE’s established international contractors. The Middle East business is led by managing director Mark Andrews, who was one of the leaders listed within 2018 Construction Week Power 100. Its portfolio includes clients such as Expo 2020 Dubai, for which the Middle East business is building the world expo’s Leadership and Media Pavilions, as well as its ‘Hammerhead’ road, through two $182.4m (AED670m) contracts.
Additionally, Laing O’Rourke Middle East worked as main contractor for the Aloft City Centre Deira hotel, which topped out in September 2017. Last October, the firm was awarded a contract to expand Khazna Data Centres, which includes the construction and fit-out of its Pods 4, 5, and 6 in Abu Dhabi and Dubai.