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CN100: Margins plummet at biggest firms as top 100 turnover grows

The industry’s 10 largest contractors have an average pre-tax profit margin of -0.5 per cent as losses from problem contracts have taken their toll, data from this year’s CN100 reveals

The CN100 shows the industry’s top 100 contractors reported an average pre-tax margin of 2.8 per cent, up from 2.4 per cent in last year’s CN100 and 2.1 per cent in 2015’s CN100.

Overall turnover is up 4.5 per cent, with the top 100 posting a combined revenue of £67.33bn – up from £64.40bn a year earlier.

Among the biggest climbers are: Henry Boot, up 28 places from 73rd to 44th; and Multiplex, who were 41st just two years ago but are now the UK’s 18th largest contractor by turnover, ahead of the likes of Vinci, Sir Robert McAlpine and Lendlease.

Winvic has risen 45 places in two years from 81st in 2015 to 36th this year, following an 83.5 per cent increase in turnover to £417.7m.

However, the industry’s largest 10 contractors by turnover – including heavyweights such as Balfour Beatty, Carillion, Kier and Laing O’Rourke – posted a combined turnover of £31.9bn but a combined pre-tax loss of £52.9m, with their average pre-tax profit margin slumping to -0.5 per cent. 

This compares with a combined turnover of £30.65bn, total pre-tax profit of £351.5m and an average margin of 1.5 per cent in last year’s CN100 top 10. 

Many of the 10 biggest firms in this year’s CN100, which ranks the industry’s top 100 contractors by turnover, have been hit by significant losses over the past 12 months, including Amey, Interserve and Laing O’Rourke.

Laing O’Rourke, which posted a £245.6m pre-tax loss after losses on several UK contracts and a £93m writedown on a hospital PFI in Canada, has dropped two places to seventh in this year’s CN100 table.

Other contractors in this year’s top 10 to have posted a loss in their most recent results include Amey, which slipped £49.3m into the red driven by a £77m loss in its highways division.

Interserve, having been plagued by issues on its energy-from-waste projects, posted a £94.1m loss for the year in its most recent results – its first pre-tax loss for more than five years, while Kier recorded a pre-tax loss of £15.4m.

The CN100 2017

The definitive ranking of the industry’s top 100 contractors by turnover, with full analysis of all the statistics and interviews with some of the industry’s leading contractors.

The startling figures come as several leading contractors have raised concerns about the current level of profit margins. 

These have included Balfour Beatty’s Leo Quinn, who told Construction News margins of less than 5 per cent were “not sustainable”.

Midas chief executive Alan Hope, North Midland boss John Homer and ISG’s Paul Cossell have also proposed a 5 per cent target. 

The CN100 also reveals that Balfour Beatty remains the industry’s largest contractor by turnover with a revenue of £6.92bn. It is followed by Carillion in second, Kier in third and Interserve in fourth.

Laing O’Rourke’s two-place fall allowed Morgan Sindall and Galliford Try to move up one place each to fifth and sixth respectively.

Amey and Mace remain in eighth and ninth place respectively, while Bouygues replaces ISG in 10th after the latter changed its accounting year following its takeover by private equity firm Cathexis last year.

New entrants to this year’s table include concrete specialist Morrisroe Group; Bristol-based contractor Beard; Yorkshire-based developer and contractor Caddick Group; and building envelope specialist Lakesmere.

Firms to drop out include scaffolding and access giant Actavo UK and M&E specialist Gratte Brothers.

The CN Specialists Index

Construction News has also analysed results for the industry’s leading specialist subcontractors across seven sectors, including building envelope, demolition and steel, in this year’s CN Specialists Index.

CN100: Margins plummet at biggest firms as top 100 turnover grows

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