The chief executive of Galliford Try has said contractors are winning work at a loss as a result of increasingly crowded tender lists
Greg Fitzgerald, speaking after the company issued a mixed trading update for the six months to 31 December 2008, said contractors were taking drastic action to boost cash flows and win clients.
He said: “It’s got much tougher because more companies are looking for work in the public and regulated sectors. That means margins are depressed, and given some of the jobs we’ve lost out on I’d say some are winning work at a loss.”
But he said Galliford Try was well placed to win future work. On 31 December 2008, its order book was £1.7bn, 91% of which was in the public and regulated sectors.
Its housing business has suffered as a result of the economic downturn and figures were down on the same period in 2007 (see box).
The company has put more than 500 of its 4,200 employees on a four-day week, a move that has resulted in a 15% reduction in staff costs.
Asked whether the firm would have to cut more staff in the future, or put more on a four-day week, he said: “Never say never. It depends on what happens during the spring selling season.”
A £12m tax rebate from land writedowns left the company with £1m net cash at the end of the year, compared with debt of £47m in 2007.
Fitzgerald said Galliford Try’s relatively strong finances would change the pecking order in the housebuilding sector.
“At the moment we’re the eighth largest housebuilder in the country but we’ll be much further up the scale and in the top five within two years.”