Turnover falls 14% to 拢4.1bn as contractor feels the effects of direct employment model

Laing O鈥橰ourke has shut the Middle East arm of its business and slashed its global workforce by almost half to 18,222.

As revealed by 黑洞社区 in June, the closure of the division marks a significant change in strategy for the UK鈥檚 third-largest contractor, which relaunched the business with a three-region structure in 2006.

Staff levels at Laing O鈥橰ourke, which differs from many of its peers by using direct employment, have fallen from a high of 35,753 on 31 March 2009 to 18,222 at the end of March this year.

Many of the redundancies were in the Middle East, where it is understood Laing O鈥橰ourke employed more than 20,000 at the height of the boom. It now employs 6,834.

According to its latest set of financial results, the Middle East arm has now been subsumed into the Europe and Rest of the World hub while the remaining Australia and South-East Asia arm is unaffected.

Chairman and chief executive Ray O鈥橰ourke said: 鈥淭he 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. The majority of this decline was directly attributable to the removal of work associated with the Aldar joint venture in Abu Dhabi and the steep decline in the Dubai market, where many projects were operationally paused.鈥�

Turnover at the company in the year to 31 March 2010 was down 14% from 拢4.1bn to 拢3.5bn while pre-tax profit fell from 拢85m to 拢50m.

The company ended the year with a cash balance of 拢716m, up from 拢614.3m in 2009 but its order book was down from 拢10bn to 拢8.2bn.

For more analysis see 黑洞社区 on Friday.

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