Pre-tax profits plummeted at Willmott Dixon last year, with the firm blaming tough trading conditions and spiraling supply chain insolvencies for a set of “disappointing” annual results.
Profit before tax, goodwill amortization and exceptional items was £10.9m, down from £41.2m a year earlier, according to the group’s accounts for fiscal year ending December 31, 2022.
And taking into account the £2.4m goodwill amortization and a £7.5m provision for what the company described as “expected but not yet virtually certain” insurance recoveries , pre-tax profit fell further from £28m in 2021 to £1m.
Willmott Dixon is taking legal action against subcontractors and consultants over faulty cladding at a residential building in Woolwich following an agreement with owners Tesco to carry out remedial work.
However, in audited accounts filed at Companies House, the company said turnover had held up better than would have been expected given the difficult recent conditions, growing by 3.9 per cent to to 1.15 billion pounds sterling.
The rapid and sustained rise in inflation had a particular impact on results, it said, with more than £100m of potential new orders postponed or canceled in the latter part of last year.
Group chairman Colin Enticknap said: “Clients found they could no longer meet their own viability targets and, on projects already secured at pre-inflation prices, our supply chain partners really struggle to adapt – and, in some cases, survive – the large scale of unforeseen cost increases they have suffered.
“Where supply chain failures occurred, progress at sites was severely hampered and obtaining replacements came at a significant cost.”
Willmott Dixon’s order book remained “surprisingly resilient” despite postponed and canceled orders, Enticknap added.
A recent reorganization that saw two of its construction divisions merged into a renamed Southern operation, the integration of business support services and a hiring freeze in most areas was expected to result in a £20m reduction in annualized costs, improving resilience until market conditions were met. , added.
Having taken steps to balance costs with the lower end of revenue expectations for 2024, the company was well positioned to deliver improved performance over the coming year, Enticknap said.
