Galliford Try boss says worries about slowdown beginning to ease

Galliford Try boss Bill Hocking has said fears of a recession in the industry are receding with projects previously mothballed now coming back on stream.

This week the latest S&P Global/CIPS UK Construction PMI figures showed total construction orders in February increased at their fastest pace for nine months.

Last autumn, Hocking told Building he thought any recession would be shallow and, announcing his firm’s half year results this morning, said worries of a tough year ahead were easing.

“The public sector has been fairly consistent [in their confidence] and the private sector is now a lot more bullish,” he said.

Last year’s slowdown had been caused by rising inflation and political turmoil, notably the impact of last September’s mini-Budget, Hocking added.

“Apart from some politically-induced delays or the fear of recession, [the slowdown] has not affected the business at all.”

The firm said it was expecting full-year pre-tax profit to be at the upper end of analysts’ expectations with the market consensus pencilling in profit of between £20m and £23.3m on revenue up 9% to £1.35bn.

But he warned that while inflation was slowing costs had not come down. “It’s just that they’re not continuing to go up like they were.”

The firm has written protection clauses for inflation into its contracts which Hocking said “most” clients had been prepared to sign up for. “It’s pleasing to see their pragmatism,” he added.

Galliford Try said it spent a further £4.5m during the six months to December 2022 on upgrading its IT system following the £6m it shelled out in its last financial year.

Hocking said the upgrade would be completed by the end of June when its latest financial year draws to a close.

He also confirmed the firm would bid for social housing frameworks now a no-compete clause with Vistry, which bought its Linden Homes business three years ago, has elapsed.

The firm works in the private rented sector and is carrying out a £56m scheme in Milton Keynes and a £105m deal in Leeds – currently Galliford Try’s biggest job.

“We build residential schemes for private clients all the time. We’ve got no reason we shouldn’t bid for [social hosing].”

Hocking said the schemes it would look at would be mid-rise jobs for registered social landlords but added: “We are not going to build houses.”

Interim group turnover was up 14% to £679m with the firm climbing back into the black with a pre-tax profit of £7.6m from a £2.6m loss last time, after exceptional items, including costs associated with its deal to buy collapsed firm NMCN’s water business, blunted its bottom line. The firm’s order book at the end of last year was up £100,000 to £3.5bn with 95% of its work secured for the current financial year.