Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Rok predicts spreading recession

The construction industry is in recession, with the economy as a whole destined to fall into one during the winter, according to Rok chief executive Garvis Snook.

In the week the building and maintenance services company announced strong half-year results, Mr Snook said it was gearing up for the downturn by focusing on in its core repair and maintenance business and scaling back new build activity.

He added: “We are probably already in a technical recession. I was here in the early ’90s and this has all the characteristics of that time. But the good thing is that it is going to be faster going down and will therefore bottom out earlier.

“I am actually more confident than I was a year ago - there had to be a correction and we are now clear about the next two to three years.

“I have a horror of construction companies doing what they did last time and cutting each other’s throats to win business at negative margins and then suffering for years afterwards.

“I don’t want to see Rok in that position, which is why we focus on where there is still demand and still proper returns.”

Rok reported £547 million revenues for the first six months of the year, up 37 per cent on the same period last year. Pre-tax profits were up 22 per cent to £12.9 million. Its margin was unchanged at 2.4 per cent.

It is closing its commercial property arm after revenues fell from £35 million in the first half of 2007 to £14.7 million this year.

Mr Snook said the company expected capacity in new build to be £200 million less going into next year than it was going into 2008.

Although its new build activity showed strong growth, this was mostly through acquisition.

The company reported long-term framework contracts worth £2 billion, up 25 per cent on last year, much of it in social housing and education.

Mr Snook said the company expected to acquire more firms this year.

It will focus on South Wales, East Anglia and Northern Ireland, as well as the plumbing, heating and electrical business.