ISG has seen a £74m drop in turnover as its construction division puts the brakes on recovery
ISG is recruiting in every division except construction, as it predicts a 10% drop in regional work over the next six months.
The firm recorded revenue of £972m for the year ended 30 June 2010, down from £1,046m in 2009. Pre-tax profit was £8.7m, down from £11.8m in 2009.
The annual report also revealed an order book totalling £742m, compared with £822m last year, which comprises only 30% public sector work overall. But its regional construction business, which accounts for a third of the firm’s turnover, is weighted 62% towards the public sector.
David Lawther, chief executive of the firm, said: “In terms of this current year, the second half will see a 10% decline for the regional business. We are seeing the odd ready scheme starting to come back in the regions, but obviously there is the public sector issue.”
He said that the firm will reallocate workers, but would not discuss potential redundancies. The regional construction division recorded a revenue of £338m (2009: £367m) and an operating profit of £3.5m (2009: £3m) up to 30 June 2010, due to increased margins. It has an order book of £276m, compared with £286m at this point in 2009.
The London construction business recorded an operating profit of £2.2m (2009: £1m) on a revenue of £154m (2009: £217m). Lawther said that, unlike the regional business, the London division is “heavily weighted” towards the private sector, though he doesn’t anticipate an upturn until the second half of 2011.
He continued: “Overall we will be adding numbers to the business, as we’re recruiting in food retail, bank retail, London fit-out, Europe and Asia. Construction is the only business that we’re not recruiting in and yes it’s going to have a hard time.”
ISG also has a joint venture in the Middle East, split between joinery and fit-out, for which the turnover is not reported, but Lawther described as “less than £20m”.
The firm is currently swapping its share of the joinery business to take total control of the fit-out business, as it anticipates rising workloads in the region.
Lawther said: “Abu Dhabi is creating a new financial centre which is being built at the moment. We’d expect to see opportunity from that in the next 18 months, as well as in Qatar. And Dubai has started to come off the bottom now.”