Half-year results. EU referendum impact delayed. CN100 trends. This industry has reasons to be optimistic.
Okay, the industry is technically in recession. Okay, companies are still under enormous financial pressures. And okay, Brexit hasn’t happened yet so it’s impossible to know the impact it will have on construction output.
But August has revealed some interesting trends that are worth considering in the context of an industry that must be near the forefront of Theresa May’s mind when she considers how to get the economy moving.
Firstly, the half-year results of the last few weeks. Balfour Beatty may have recorded another half-year loss (£21m), but it reinstated the dividend and is more than 80 per cent of the way through its problem jobs.
Likewise, Interserve and Costain have had disastrous jobs in the Energy-from-waste sector and on a Manchester PFI respectively, but outside of that they are showing strong signs of things improving (for example, Interserve reducing debt; Costain profits up).
For others like Bam Construct, Carillion, CRH, Henry Boot and NG Bailey (not to mention the housebuilders), the mood was upbeat.
Secondly, the dreaded Brexit question. Could it have negative ramifications? Absolutely. Are they filtering down to the supply chain? Not yet.
Our quarterly Barometer showed a bit of a shrug of the shoulders from senior managers about the referendum impact, despite projects being delayed. Chief executives queued up to tell CN to stop worrying about the result in the last few weeks.
Here’s Henry Boot chief executive John Sutcliffe talking to CN today: “If you had said two months ago in the days after the vote, ‘What do you think’s going to happen?’ I would have said the outlook would be pretty terrible.
“But here we are two months down the track and it’s not been too bad at all.”
The other political situation uncertainty surrounds Theresa May’s government. Hinkley, Heathrow, Northern Powerhouse, foreign investment. There have been some concerns.
But again, there isn’t a huge amount that can be done now. And word on the street is there’s a genuine emphasis on construction in the industrial strategy focus championed by the new prime minister.
Finally, the CN100 is published on Tuesday. The trends are fascinating and while there are admittedly still problems out there, taken together with the Specialists Index, things would appear to be getting better. But you’ll have to go online Tuesday morning to find out more.
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