Construction firms look to build on a good year

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The Independent Online

Recent rises in interest rates and raw material costs failed to take the shine off a good year for the construction industry, it emerged yesterday, as four UK builders and support services groups published upbeat trading statements and predicted another good year for 2007.

Alfred McAlpine, the infrastructure support group, said its profits for 2006 were set to come in at the top end of expectations, claiming that its strong growth had been driven by an extension of existing contracts as well as a number of key new business wins.

The company said it was beginning 2007 with an "increased order book and a healthy pipeline of new opportunities" on the back of an increased tendency by businesses to outsource the management and maintenance of their buildings. As well as updating on its full-year trading, the group revealed it had secured a further £155m of new contract wins this week. The chief executive, Ian Grice, said he believed the company was "well placed to continue the momentum of the last 12 months".

The construction and housebuilding group Galliford Try also issued a bullish trading update, revealing its first-half results were set to be in line with expectations, and adding that it was "confident" of its prospects for the year ahead.

The group built a record 593 new homes over the six months to 31 December - up from 484 during the same period a year earlier. It almost doubled its landbank over the period as well, reaching 4,818 units, compared with 2,455 at the start of 2006. The company said it plans to increase its investment in the housebuilding business in 2007 due to its confidence that the positive market conditions will prevail.

Rival Bovis Homes said its full-year results were on track to be in line with expectations for 2006, on the back of a 15 per cent rise in housing completions over the year. The group's average sale price increased by 4.7 per cent to £183,700 over the year.

British house prices fell for the first time in six months in December, according to Halifax, suggesting the two recent interest rate rises may now be taking effect. However, Bovis's chief executive, Martin Harris, brushed aside the statistics, claiming the overall price structure remained fairly consistent.

The engineering and construction specialist Keller said it had enjoyed an outstanding 2006, claiming its results were set to come in slightly above market expectations. Its chief executive, Justin Atkinson, added that the group was also entering 2007 "in good shape".

In spite of the positive updates, shares in all four groups fell yesterday. McAlpine and Galliford Try slumped by more than 2 per cent, while Keller and Bovis dipped by around 0.8 per cent. However, all four have seen substantial gains over the past six months.