July 15, 2020 / 10:15 AM / a month ago

RPT-UPDATE 1-Galliford Try's order book grows, but virus crisis hammers margins

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July 15 (Reuters) - British construction firm Galliford Try on Wednesday reported a 10% rise in the value of its order book at the end of 2020, while pointing to a slump in operating margins due to costs generated by the coronavirus crisis.

"The combination of site closures and reduced productivity significantly reduced revenue in the final quarter of the financial year," Galliford said in a statement.

The company said the costs of new operating procedures and longer site programmes implemented to curb the virus' spread led to a drop in gross margin for fiscal 2020, with divisional operating margins "expected to show a loss of about 5%".

Analysts from Liberum said that now pointed to a pre-tax loss of 61 million pounds ($76.79 million) for the 2020 financial year.

However, the company, known for projects ranging from the re-development of the Wimbledon tennis venue to hospitals and city bypasses, said it started the new financial year with productivity close to normal and expected operating margins to improve in line with its targets.

The company's shares jumped 8.9% to 110 pence at 0712 GMT.

Galliford, which sold its housing divisions to Vistry Group in January, said its order book was up 10% at 3.2 billion pounds for the year ended June 30, with 90% of revenue for the new financial year secured.

According to a survey last week, growth returned to British construction companies in June for the first time since the lockdown began, albeit from low levels, with housebuilders as well as commercial and civil engineering construction companies reporting an increase in activity. ($1 = 0.7944 pounds) (Reporting by Samantha Machado in Bengaluru; Editing by Devika Syamnath)

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