Vinci UK has said profit margins will fall in 2009 as a result of the credit crunch.
The warning came as the company posted a 22% rise in turnover to £774m for the year ended 31 December 2007. Pre-tax profit increased 27% from £32m to £40m, boosted in part by the sale of two divisions. The result was a margin of 5%.
Alec Comba, Vinci UK’s finance director, said: “2009 will bear the brunt of the slowdown.
A 5% margin is extremely high, but sadly, I don’t expect it to continue. We’ll do well to get 3%, a figure that is more in line with the industry norm.”
Comba said turnover in 2008 would also struggle to hit the £850-900m mark and a figure of £800m was more likely. Despite the prediction, David Joyce, Vinci UK’s chief executive, said the group was still on track to hit £1bn turnover by 2010.
The group’s acquisition rate of regional contractors will also slow, according to Comba. He said: “It will be more opportunity-led because there will be more forced sellers out there. Valuations have become high, but that froth should come out of the market.”