Laing O’Rourke has shut its dedicated Middle East arm and cut its global workforce by almost half to 18,222 people, Building reported.
Employee numbers at Laing O’Rourke fell from 35,753 on 31 March 2009 to 18,222 at the end of March this year.
Turnover was down by 15 per cent as a result of declines in the UK and Middle East markets, Construction News reported. Pre-tax profit tumbled to £50m from £85m and the company ended the year with a cash balance of £716m, up from £614.3m in 2009. The order book fell to £8.2bn from £10bn.
Redundancy payouts cost the company £16.7m but O’Rourke warned that further “decisive action” to reduce the cost base might be required.
The closure of the division marks a significant change in strategy for the UK’s third-largest contractor as it relaunched the business with a three-region structure in 2006.
According to its latest results, the Middle East arm has been subsumed into the Europe and Rest of the World division. The Australia and south-east Asia arm is unaffected.
Chairman and chief executive Ray O’Rourke said: “The year proved our most challenging ever with a significant number of people leaving the group as we took decisive action to align business costs with current and anticipated workload.”
He blamed the majority of the drop on the decline of its joint venture with Aldar in Abu Dhabi and the “steep decline” in the Dubai market but said there was also uncertainty about public spending in the UK because the coalition government was “an unknown proposition”.
O’Rourke added: “To ensure we remain insulated from longer-term consequences, we will stay committed to our policy: absolute refusal to follow the market down by chasing unprofitable work.”
He said the firm would be “selective but decisive” in pursuing opportunities in the future and that it was hopeful of winning work through many of the framework deals – including Building Schools for the Future local education partnerships – secured last year.
“We are adopting a cautiously optimistic approach in recognising work that might flow through these frameworks,” he said.
