Heyrod boosts profits but expects tough times ahead
BUILDING contractor Heyrod Construction said that it would continue to be selective in bidding for new work after declaring a 133% rise in pre-tax profits to £2.1m in the year to March 31, 2010.
The Oldham-based firm hailed the profit figure as “a tremendous result”, but said it was largely due to the conclusion of work which was started during a more favourable economic climate. Among the contracts completed during the year was a project at MediaCity:UK in Salford Quays for Peel Holdings, and at The Rock shopping mall development in Bury town centre for Hammerson.
Turnover at Heyrod dropped for the second year in a row, falling by by 33% to £26m (2009: £39m).
“This is a reflection of the market which continues to show a downward trend as a result of a large amount of work in the private sector not proceeding,” the company said.
A statement accompanying its accounts blamed “funding issues as a consequence of the reluctance of the banking sector to take risk in current market conditions”.
This lack of work has had a knock-on effect on margins. The firm said that it was “very evident that there are too few jobs for too many contractors” in the current market, which had led to margins being reduced aggressively.
“Our policy is that we will be extremely selective in the current market and we will secure sufficient work where we believe there is enough value to give sustainability to the business.”
Moreover, the firm said that it believed its north of England heartland to be harder hit than either the South East, which is benefiting from projects surrounding next year’s Olympic Games, or 2014 Commonwealth Games host country Scotland. As a result, it said that it expected trading to remain difficult for the next two years.
“We do see an upturn in the marketplace in the South East of England which will start in 2011 and there are signs that private money will come back into the marketplace.
“As in most recessions this area seems to be able to withstand the recession much better than the remainder of the UK and it is hoped that we will secure our first contract very soon within this area, which will help us to build our business to a larger extent in the Southern region of the country”.
The value of the company’s net assets dropped to £6.4m (2009: £10m) and it paid out a £5m dividend to shareholders. Despite this, it remained cash positive with net funds of £11.5m (£13.1m) at its year end.
The average number of employees dropped to 261 from 430.
