Sir Robert McAlpine saw its profit margin shrink to 0.86 per cent last year despite a strong rise in revenue, although its profits were flat.
The family-owned contractor had a turnover of £1.07bn in the year to 31 October 2022, an increase of £150m, or 16 per cent, on the previous year. However, its pre-tax profit rose by just £150,000 to £9.3m. In its previous financial year, Sir Robert McAlpine had a profit margin of 0.98 per cent.
The company set aside £20m in provisions, with £8.8m relating to repair work on completed contracts and £11m relating to loss-making jobs. Of the provisions, £2.8m was a restatement of part of the £24m of corrective provisions made by the group last year.
Sir Robert McAlpine’s cash fell slightly, from £106m to £100m, but the company said it had “no debt other than a nominal level of finance leases”. It spent £3.2m on directors’ pay last year (up from £2.8m), with the highest-paid director receiving £841,000 (up from £765,000).
Commenting on the results, Sir Robert McAlpine, Chief Financial Officer, Leighton More, said: “Th[e] The recovery in activity levels following the global pandemic was tempered by downstream supply chain, labor availability and inflationary pressures. The challenges in the trading environment were further exacerbated by the events that unfolded in Ukraine in February 2022.”
In April, the contractor cut about 40 jobs as it restructured its business around sectors rather than regions. More said the “adaptation and streamlining” of its model would save £20m a year when completed in 12 to 18 months.
“A lower cost base will allow us to navigate the ongoing challenging economic environment, as well as maximize operating margins, as the global economy recovers from the inflation and energy price shock that has hit the past 12 months,” he added.
Paul Hamer, chief executive of Sir Robert McAlpine (SRM), said: “Once again we have had to face unprecedented challenges as an industry.
“We recently took our next strategic step, evolving SRM for future generations and setting the business up for long-term success,” he said. “As a result, we have moved to a national, sector-focused operating model, with centers of excellence that will provide rapid and expert support to our projects, creating more value for our customers.”
