Van Elle warns contract delays to weaken year-end

Piling contractor Van Elle has warned that railway work contract delays will see revenue and margin slip below expectations this year.

In a trading statement this morning, the recently Stock Market listed contractor warned that delayed starts would see revenue for the year to April slide 5% to £93m and operating margins below expectation.

Van Elle’s specialist piling division covering mainly Network Rail work had expected to seal several contracts early this year.

But these have now be delayed beyond the end of the current financial year and, in a small number of cases, the expected call-off schedule and distribution of work packages looked set to be revised, said the firm.

Looking ahead, Van Elle said it remained optimistic about long term opportunities within its rail business, given the ongoing need for track maintenance as well as significant capital programmes such as track-bed stabilisation and the electrification of major routes.

“However, the delay and deferral of contracts in the fourth quarter is disappointing and creates some uncertainty around this market in the near term.

“In light of this, the board believes that it would be prudent to assume only a modest increase in the level of rail activity, and growth in the specialist piling division as a whole, in the coming year until visibility over a number of programmes becomes clearer,” said Van Elle trading statement.

It added that the outlook for its remaining three divisions covering general piling, ground engineering services and ground engineering products remained in line with expectations.

This was expected to keep the firm on track to deliver double-digit revenue growth in the year ending 30 April 2018 albeit from a lower base in 2017.

Van Elle also said it would fight any claims for bonus payment allegedly due to an employee arising from historic employment arrangements.

Concern about a material liability to payments allegedly due to a former employee and whether other individual members of staff would bring forward a claim was first raised raised in the half-year results.

from Construction Enquirer http://www.constructionenquirer.com/2017/03/22/van-elle-warns-contract-delays-to-weaken-year-end/

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