Ferrovial’s UK business suffered another pre-tax loss last year after taking a further hit on the upgrade of Scotland’s M8 motorway.
The UK arm of the Spanish giant Ferrovial Agroman reported a pre-tax loss of £12m in the year to 31 December 2016, filings published at Companies House show.
This compared with a loss of £13m in 2015.
The unit was hit by a £17m loss – including a provision for forecast losses – on improvements to the M8, which connects Glasgow and Edinburgh. This was on top of a £26m loss on the improvement works in 2015.
Furthermore, Ferrovial Agroman stated in its accounts that since the end of 2016 the “forecast outturn on the project has deteriorated significantly due to higher labour and material costs”, driven by efforts to complete the work on time.
As a result of these further developments, forecast losses of £29m are now expected on the M8 project.
The company has also been hit by higher material costs, due to “changes in design requiring larger quantities than previously forecast”.
The firm said the M8 project has proved difficult “historically” because of “issues with design, the complexities on a brownfield site and the shortage of labour and materials in the local construction market”.
Ferrovial Agroman bagged a spot in 2013 on the £415m roads programme to improve some of Scotland’s key roads. The upgraded M8 opened to traffic in April this year.
In its company accounts, the firm admitted 2016 had been “another mixed year”.
However, turnover increased 39 per cent to £364m, helped by an extra £44m of revenue from road and projects and £38m from tunnelling.
Among the projects the firm is working on is the central section of the Thames Tideway Tunnel alongside Laing O’Rourke; and HS2 central area enabling works with Bam Nuttall and Morgan Sindall; and Crossrail at Farringdon.
The company boosted its cash position to £68m, up from £64m in 2015. Its order book fell to £639m, from £826m the prior year.