Project delays and cutbacks on contracts at its civil engineering and utilities arms have hammered profits at North Midland Construction.
The firm saw pre-tax profits nose dive 43 per cent last year to 3.1 million after its largest division, civil engineering, ran into problems on two contracts – the Fiddlers Ferry power station near Widnes in Cheshire and a sewage treatment works in Halifax, West Yorkshire.
North Midland chairman Robert Moyle said: “Both projects have experienced major delays for a variety of reasons and the contractual situation has become very complex, with a large divergence currently being recorded between monies claimed and those certified.
“An anticipation of the eventual downturn is reflected in the accounts.”
And Mr Moyle said its utilities arm had suffered major losses on a lump sum contract in Kent and missed out on lucrative contracts for Telent – the new name for the former Marconi – which has been carrying out communications work for BT.
He added: “On framework contracts, such as those with Telent, there is a very high fixed cost and overhead required to deliver operationally.
“The contracts are at the end of their duration and prices are consequently under pressure. Any decreases in volumes, such as those experienced during the year, consequently lead to losses on a large scale.
“Management did not react quickly enough to the downturn and both operational and management changes have been implemented.”
The firm’s building division saw revenue climb to 37.4 million with a profit of 3.2 million. Its M&E arm Nomenca also turned in an improved set of results with turnover climbing to 45.3 million and profits up to 1.3 million.
Group revenue was up one firth to 211 million.