According to an Ernst & Young survey, eight construction firms issued profit warnings in the third quarter of 2000 – 7% of listed companies in the sector. Only software and computer firms performed worse.
Two hire firms were singled for comment. Hewden Stuart was the joint worst performer, issuing two warnings in the period, and Brandon was described as a likely target for takeover or merger.
This highly fragmented industry is suffering from significant skill shortages and wafer-thin margins.
Ernst & Young report
The report ascribed the problems to bad weather, the effect of the weak euro on exports and higher than expected costs. The report said: "This highly fragmented industry remains fiercely competitive and is suffering from significant skill shortages and wafer-thin margins." The report also pointed to the slow uptake of e-commerce in the industry. It said: "Few organisations have been able to achieve the commensurate step change in business approach and convert that to bottom-line performance." The round of recent acquisitions and restructuring also contributed to the sector's poor performance. The report said expectations of increased profitability were no longer proving deliverable, and clients' demands for tighter project deadlines often led to technical difficulties.
