Vinci’s UK profits dip amid Taylor Woodrow losses
Whitechapel Crossrail station
Vinci’s UK operations suffered a 38.3% drop in profit in 2018, after being dragged down by losses in its Taylor Woodrow division.
The UK group’s pre-tax profit for the year to 31 December 2018 dipped to £13.8m, down from £22.4m in 2017.
Meanwhile, turnover remained broadly flat at £873.3m, up from £870.7m the year before.
Turnover in Vinci’s UK building division decreased to £401m in 2018, down from £422m in 2017. The firm blamed an increased period of time to get preferred bidder schemes onto site and a delay in the next phase of the New Covent Garden Market project.
It made an operating profit of £12.5m, making an operating margin of 3.1%.
The business delivered a range of projects during the year, including a new paediatric ward at the Royal Free hospital in London, a £60m contract to build student accommodation at the Bishop Gate development in Coventry, and a £27m deal to build Northampton International Academy.
Contract awards for the building division started slowly but have “increased significantly” in the last six months, particularly in the North West. The business has secured 75% of its 2019 turnover and has a preferred bidder list of work totalling over £850m.
Meanwhile, Vinci’s Taylor Woodrow civil engineering division made a loss of £13.6m in 2018, driven largely by the cost of closing out projects including the Nottingham Tram and the Crossrail depot at Old Oak Common, where there were two defects to deal with. Turnover remained stable at £213m in 2018, compared to £205m in 2017.
Vinci said 2018 brought to a close Taylor Woodrow’s long-term reliance on rail projects linked to Crossrail and large London Underground projects, with its long-term business plan now supported by High Speed 2 and the Regional Delivery Plan for Highways England.
However, work on Whitechapel Crossrail station is still not complete and still receives “regular changes to system-wide elements as their design requirements become clear”. The project is now expected to complete in the third quarter of 2019, after the main construction elements in the first quarter of the year. The station was originally due to open along with the central portion of the Elizabeth Line in December last year.
Vinci Facilities’ operating profit margin rose from 2.5% in 2017 to 3.2% in 2018, contributing £7.8m to the group. Revenue increased from £224m in 2017 to £245m in 2018, with growth in all areas of the business.
Vinci UK’s development arm, which includes the Vinci St Modwen 50/50 joint venture, is working on the redevelopment of the 57-acre New Covent Garden Market site in Nine Elms, London. A new phase of construction started in October last year after a one-year pause as a result of the southern car park not being released by the local authority.
The group’s technology centre, which provides specialist testing, consulting and investigation services in the sector made a £650,000 profit on a £7.6m turnover.
Commenting on the year’s performance, chairman Bruno Dupety said: “2018 was a good year for the group, with a steady level of activity and a profit rate of 1.5%. Net positive cash has significantly improved again, to a year-end position of £275m and net equity has improved by £8m to a positive year-end position of £88m.
“We enter 2019 with a growing order book now exceeding £1bn and we are on track for a positive 2019, as long as we continue relentlessly to focus on: delivering our projects on time, safely and with a high and improving level of quality and productivity; developing our skills, knowledge and following The Way We Work processes; fostering initiatives, innovations and development of our people across the group.”