Profit margins at Midas have slumped to 0.3 per cent as clients force down prices, according to the firm’s end-of-year accounts.
The company’s pre-tax margin of 0.3 per cent for the year to 30 April 2018 was down from the 0.8 per cent recorded for the previous 12 months.
Revenue at the firm jumped 25 per cent to £267.4m for the year, up from £213.6m.
Midas, which is largely based in the South, attributed turnover growth to more investment coming through following a pause in the wake the Brexit vote.
However, the company said a “hardening of the market” had forced down prices, reducing pre-tax profit from £1.6m to £0.7m.
In August last year Midas chief executive Alan Hope told Construction News that the low margins posted by some contractors were “not sustainable”.
Its full-year accounts show that performance in the firm’s main construction business was particularly weak, with pre-tax profit down from £0.7m to just £43,000 for the year to April on revenue of £171m.
In response to the tougher market, the company said it was focusing on lower-risk two-stage tenders and negotiated work, which it said would help achieve “sustainable margins”.
The main construction business increased its reach across the UK and added two more regional offices in Longbridge and Leatherhead on the 12 months.
Retail sector work recorded a pre-tax loss of £106,000 in the latest accounts, compared with a profit of £61,000 in the previous year. However, revenue in the sector increased by more than two-thirds from £14.8m to £24.9m.
Midas said the retail market was experiencing difficulties and that the pipeline of work had declined as a result.
The company was able to maintain its cash reserves at £26.7m, which it said showed “the underlying strength of the group and focus on working capital management”.
Midas also reported an improvement in its payment of suppliers.
In its most recent payment practice report published in May, Midas Construction said its average time to pay invoices was 45 days, compared with 48 days in its previous submission last November.
There was also in a fall in the proportion of invoices paid late from 20 per cent to 14 per cent.