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Willmott Dixon profits plummet almost 20% but £1bn turnover remains stable

Willmott Dixon has reported a 19.4 per cent pre-tax profit drop in 2013, while its turnover was stable with a slight cash increase compared with the previous year.

The contractor reported £16.2m in pre-tax profit in the 12 months to 31 December 2013, down 19.4 per cent compared with £20.1m in 2012. After amortisation, pre-tax profit was £13m (2012: £15.7m).

Its turnover dipped slightly to £1.02bn in 2013 from £1.03bn in the previous year.

Willmott Dixon chief executive Rick Willmott said the fall in pre-tax profit was down to “a small number of projects now completed that did not deliver the margins we had expected”.

The contractor’s secured forward order book stood at £2.05bn in March 2014, with 91 per cent of its budgeted work secured for this year.

In the capital works division, turnover fell slightly to £899m in 2013 compared with £904m in 2012.

Mr Willmott said the contractor had insulated the business from reduced work volumes by retaining repeat clients and also by expanding into the higher education and retirement markets.

It was awarded the £46m second phase of Birmingham City University’s estate masterplan last year and appointed to build the University of Leicester’s £42m College of Medicine.

Willmott Dixon said its Regen business has a “significant development pipeline” of residential units for private rental and private sale.

In 2013 it launched its private rental sector company be:here, which aims to deliver 5,000 PRS units in the next few years.

Its support services business turnover increased by £11m to £121m in 2013 compared with £110m in 2012.

Mr Willmott said the increase reflected growth in its repairs and maintenance business and new income streams from the Energy Companies Obligation.

“We are seeing more opportunities across our industry owing to greater economic confidence and a stronger housing market. We have focused our skillsets and resources accordingly,” Mr Willmott said.

“Our frameworks and long-term contracts continue to give us a robust pipeline of construction and support services work while our development business Regen, delivering both homes for sale and private rent, really came of age in 2013 with a significant volume of development that will increase in 2014 and beyond.” 

Willmott Dixon’s net balance sheet was stable at £147.7m in 2013 compared with £147.3m in 2012. Its cash and liquid investments increased by £2.2m to £70.2m from £68m in 2012.

Following a successful trial, the contractor is introducing its EarlyPay scheme to enable suppliers contracted under the company’s standard 42-day payment terms to receive payments 28 days after the valuation date.

A 2 per cent APR interest fee is charged between the earlier payment date and the standard payment term date.

Suppliers that have agreed 30-day payment terms with the contractor will be able to receive payments 21 days after the valuation date through the EarlyPay scheme.

Mr Willmott said: “We’re coming out [of the downturn] now. The pent-up demand we are seeing for capital projects means the key challenges we face is growing pressure on material and trade prices, staff recruitment and supply chain capacity, alongside maintaining a pipeline of work.

“These are key factors we will focus on managing this year as clients’ capital investment continues to gain momentum.”

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