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CNinsight100: Turnover muted in uncertain year for contractors

Turnover levels to qualify for a place in the 2011 CNinsight 100 were almost 10 per cent lower than the year before.

The number 100 firm this year, re-entry J Reddington, reported latest turnover of £106m, 9 per cent less than last year’s 100th place, Henry Boot, which gained entry with turnover of £116.5m.

Across the 2011 CNinsight 100 table, collective turnover fell by 3.1 per cent, from £60 billion to £58.1bn. But pre-tax profits were more protected - rising by 8 per cent compared with the previous financial year.

This year’s top five will come as no surprise - there is no change on 2010. Balfour Beatty’s position as the number-one contractor is reaffirmed, with turnover double that of second-place Carillion. But, of the top five, only Balfour Beatty has posted growth in underlying turnover (excluding joint ventures) in its latest results.

Just outside the top five, Mitie has leapfrogged Interserve into sixth place, following growth of 10 per cent.

The middle of the table has seen more drama. Willmott Dixon, the winner of several contracts and places on major frameworks this year, has moved up six places to 12th position. It has maintained broadly flat turnover year on year while other similar-sized companies have fallen back.

Ups and downs

 

But the highest risers have experienced staggering growth. John Sisk & Son - previously towards the bottom of the table in 83rd place, has grown turnover by 72 per cent to £278m, propelling it into the top 50.

John Sisk & Son says in its latest results that its continued investment in core expertise has helped secure large value projects. It has won a number of energy and civil engineering projects - two areas looked upon as bright spots in an industry forecast for dips in output over the next two years.

Other big climbers include RGCM - which has jumped 29 places to 57th and Simons, which has come out of the bottom 10 to climb 24 places to 70th.

Dropouts

This year, an alarming number of names are missing from the top 100, after some dramatic falls in revenue meant many did not get past the £100m mark.

Former CNinsight 100 firms missing out this year were Barhale, Styles & Wood, PC Harrington and Canary Wharf Contractors.

Canary Wharf Contractors, which was just outside the top 50 last year, reported a dramatic 49 per cent fall in turnover to £75.2m, while PC Harrington, which turned over £171m last year, lost 25 per cent of turnover at £84m.

Rok and Connaught, both high fliers in the top 30 of last year’s table, were casualties after both going into administration at the end of last year.

Proportion of total turnover by chart position

Click chart to expand

Other companies have remained in the table, but have fallen sharply - with GB Building dropping by 28 places to replace Simons in 94th position after turnover slid by more than a third.

William Hare and Ogilvie are also in the bottom 20 this year with dents in turnover of more than 20 per cent.

Overseas prospects

Companies are increasingly looking overseas for growth prospects, as the UK economy continues its uncertain path.

Examples include Carillion, which is growing quickly in Canada after a string of contract wins.

The firm’s joint venture, Hospital Infrastructure Partners, reached financial close on a hospital contract worth up to £1.7 billion last month, to make the JV’s sixth Alternative Financing and Procurement model (similar to public-private partnership) hospital project in the country.

Carillion also won a £123m contract to build Vaughn Corporate Centre railway station, following a £360m deal to revitalise Toronto’s Union Station.

Bouygues is pushing into Australia with a new construction arm, and is looking at potential mergers to gain a stronghold. And Balfour Beatty is continuing its surge in the US with acquisitions over the past year - including Howard S Wright, which provides services through the whole project life.

Diversification

Contractors are also increasingly looking to diversify their offerings - with a handful opening new divisions, and others showing strong performance in their support services arms.

Companies launching new sidelines include Apollo Group, with its retrofit arm to target the hotly tipped renewable energy market, not long before its planned merger with Keepmoat was revealed. The merged company aims to be a £1 billion market-leading social housing and regeneration contractor.

CNinsight 100 new entry Breyer this year launched two new divisions - repairs and maintenance offering Breyer B-Line, and a solar installation division, Breyer Solarbright.

Meanwhile, Interserve’s latest half-year performance showed a slight dip in turnover in the six months to June, but the firm credited the performance of its support services division for its 10 per cent profit rise. Turnover was broadly flat in this division, but the company’s construction arm was down 5.5 per cent.

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