News

Construction sector reveals poor 2009 results

26 February 2010

Lacklustre year-end results across the construction sector were reported this week. Pre-tax profit at construction giant Morgan Sindall slumped 28 per cent while turnover slipped 13% to £2.2bn.  Kier was able to report steady turnover of around £1bn, but its pre-tax profit fell by 47% to £16.7m.

Hybrid housebuilder and contractor Galliford Try posted a small pre-tax profit of £6.4m, but turnover dropped £774m in 2008 to £570m last year. Housebuilder Barratt Developments saw turnover fall from £1.2bn in 2008 to £872.4m last year, combined with a pre-tax loss of £178.4m compared to the £594.5m it lost in 2008.

Building reported that pre-tax profit at Morgan Sindall fell by nearly a third after revenues at its fit out and urban regeneration divisions collapsed. Pre-tax profit for 2009 was £44.7m, down 28% on the £62.3m recorded in 2008.

Turnover fell at all Morgan Sindall divisions, but the dramatic drop was in the fit out and regeneration businesses.  Turnover for the fit-out business fell by 39% to £291m, with profits of £13.8m down 47% on 2008 while profits at the urban regeneration business, Muse, were down by 90% to just £0.7m, after revenues fell 62% to £32m.

However, affordable housing turnover remained broadly stable at £374m (2008: £377m) while Morgan Est, the firm’s infrastructure business, was the only division to increase profits, up 19% to £17.1m on turnover of £770m.

Construction News reported an 18 per cent fall in turnover at mid-tier contractor PC Harrington. Pre-tax profit was down £1 million at £11.7 million while turnover stood at £171 million, 18% less compared to £202 million the previous year.

PC Harrington Contractors, the concrete contracting arm of the group, accounted for the majority of the fall in turnover, and pre-tax profit in the division also fell from £7.5m to £4.6m. The group trim its wage bill by just under 10 per cent - from £26m to £23.5m - after making redundancies and ordering pay cuts.

Meanwhile, Construction News reported that the Royal Bam Group NV, parent of the UK's £1.75bn Bam Construct and Bam Nuttall businesses, issued a profits warning ahead of releasing its financial results on March 4th.

It said that profits were expected to be about £26 million compared to previous forecasts of £88m, blamed on the group’s Dutch housing division, which has suffered from significant writedowns similar to those borne by UK house builders.

Comments

I am currently in my third and final year of a BSC Hons Construction Management degree, and as a compulsory component of the course a research project/dissertation must be completed. I have chosen to conduct my research project on 'the impact of the recession on the house-building sector of the construction industry.'
I am currently experiencing a few problems with designing my questionnaire and best questions to ask to gain the maximum information (all will be kept confidential of course), any literature, contacts, advice and key points would be gratefully received, especially from professionals of (and previously of) the industry. Thank you.

Daniel Price, 1 March 2010

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