We were not prepared for severity of recession, says chief executive Garvis Snook
Rok saw its turnover fall by a third in the first six months of the year after scaling back its new build operations, as chief executive Garvis Snook admitted the company had not been prepared for the speed of the recession.
In its half-year results unveiled this morning, Rok announced that turnover had fallen 33% from £546.7m to £364.5m. Pre-tax profits were almost halved, falling 47% from £11.3m to £6m.
The self-styled “nation's local builder” said that the fall in revenue was a result of the scaling back of its new build construction operations.
Restructuring costs, including redundancies, set the contractor back £1m during the first six months of 2009, and a further £1.1m has had to be written off due to contracted jobs being cancelled because of the recession.
Rok's operating cash flow dropped into the red with a £9.5m shortfall, down from an operating cash flow of £14.5m last year. As a result, its group net debt rose to £57m, up from £43.7m in December last year.
Garvis Snook, chief executive of Rok, admitted in the statement that Rok had not predicted the severity of the downturn. He said: “While we had anticipated a downturn in the UK economy, we, like many others in the market, were not sufficiently prepared in 2008 for the severity and speed with which it came.”
However, he added that the company had taken swift action to remedy this: “We reacted quickly without losing sight of our core strategy and the key elements that differentiate us in the marketplace. Having now scaled back our capacity for capital intensive new build commercial, industrial and retail projects we are continuing to focus our new build activities on the lower risk social housing sector.”
The company said it expected to achieve its expectations for 2009, providing there was no further deterioration in market conditions.