Profit down 8% at contractor but construction revenues up 13%
A slowdown in the solar power market held back expansion at contractor Wates last year with the pre-tax profit down 8%on the year.
Reporting its results for the year ended 31 December 2011, the contractor said pre-tax profit fell 8% over the year on a turnover of £1.1bn.The firm’s construction revenues rose 13% year-on-year but turnover for its fit-out business remained flat. Turnover at the firm’s social housing division also rose 11% and its retail arm grew 25%, the results showed.
Last year Wates chief executive Paul Drechsler said the firm expected to take on a further 300 staff as it expanded in 2011.
However, Drechsler told Building that the expansion plans had not materialised and the firm had only added 40 new staff.
“We had growth expectations for solar PV, we were in discussion with customers about a lot of opportunities and that vaporised,” he said.
He added that some PFI schemes the firm had in its pipeline were delayed by a year and hit out at the government’s indecision over the future of PFI (see story page 17).
He said the whole industry had become more competitive, especially on price. “The markets which have been the most demanding are the fit-out sector and commercial office sector in those there’s a lot of pressure on margins,” he said.
Drechsler said a focus on repeat business had seen turnover hold up well. “What contributed to the revenue growth was work with either retail or commercial customers we have worked for many years,” he said.
He added the firm had seen success winning work on the government’s academy’s programme.
He said that the firm expected 2012 to be tougher than 2011 predicting a contraction of between 5% and 10% in the sector compared with 5% in 2011.
Drechsler said that the social housing, civil buildings and school sector presented significant opportunities for Wates because of a pressing need for investment.
He added that the firm was focused on organic growth and was open to the possibility of acquisitions only where they strengthened Wates’ offer to existing customers.