Housebuilding outstrips construction, but both divisions post increase in profit
Galliford Try has posted a record profit in strong full-year results to June, with both its housebuilding and construction businesses contributing increased profit.
The group posted pre-tax profit of £114m for the period, up 20% on £95.2m the previous year. Both Galliford’s housing and construction businesses increased pre-tax profit 11%, to £87.4m and £9.8m, up from £78.5m and £8.8m respectively.
Revenue jumped a third to £2.3bn, up from £1.8bn, boosted by recent acquisitions including Northern housebuilder Shepherd Homes and contracting business Miller Construction.
Ken Gillespie (pictured), chief operating officer at Galliford Try, told Building he was pleased with the overall group performance, but said the firm’s focus was on improving margins further, particularly in the construction division.
Galliford’s construction division inched up its profit margin during the second half of the financial year to 1.2%, up from 1%, while its housing division Linden Homes hit a 16.1% margin, up from 15.1%. Galliford’s target margins for 2018 are for construction and housebuilding to hit a 2% and 18% margin respectively.
Gillespie - who was promoted to group chief operating officer in April but also retains the role of leading the construction business - said he was “satisfied” with the construction division profit: “Relevant to peer group I’ve got to be satisfied when you see some of the headlines in the sector. But for the great work we do it’s a small margin.”
He added: “The construction industry achieves fantastic things. When you interact with other sectors and show them what we do - for instance the Forth Road Crossing we’re involved in, or a complex building - these are fantastic products but at a relatively low margin.”
Gillespie said his main priorities in his new role were improving group procurement and recruitment.
He said Galliford would be looking to “collaborate” more with the supply chain and to strike more “national agreements” with suppliers to secure long-term supply.
Galliford Try’s construction order book jumped to £3.8bn, up from £3bn.
In the housing division, Galliford Try said a completed restructure of its Southern division would achieve annualised savings of up to £2m.
In a statement accompanying the results, Galliford Try executive chairman Greg Fitzgerald said all of the group’s businesses had been “buoyed by encouraging market trends”.
Fitzgerald said that while “high levels of build cost inflation” had impacted on “all” its businesses, “early signs indicate the situation may be moderating”.
Commenting on the housing business, Fitzgerald said: “The outlook for Linden Homes remains strong, with the mortgage and land markets and the planning environment all positive. The main issue is building to schedule, given the shortage of skilled people.”
Taylor Wimpey South divisional chiarman Peter Truscott joins Galliford Try as chief executive on 1 October. Following a three-month handover period, Fitzgerald will become non-exec chairman from 1 January next year.