Vinci UK profit recovers, despite inflation

Vinci Construction UK saw a significant post-pandemic recovery in revenue and profits.

The UK arm of the French group saw revenue jump to £1.2bn for the year ending on 31 December 2021, from the £858m it saw in the previous year. Pre-tax profit grew from £16.2m to £26m. Last year, the firm saw a £350m drop in revenue.

Vinci Construction UK is comprised of three main businesses – building, facilities and civil engineering. The building division was the highest contributor to the profit before tax, at £8.8m.

Vinci chairman Gilles Godard said the three businesses had “rebounded strongly” since the pandemic. He added that the businesses collectively had increased the net margin to 2.2 per cent and a cash position of above £300m.

The average number of employees also grew from 3,532 to 3,712 in 2021. However, the contractor said that major jobs like HS2 had created recruitment and retention issues. According to the firm, large-scale nature of projects like HS2 had resulted in a growing demand for resources and inflated salaries. The contractor also said it was facing challenges in the return to normal working patterns, particularly for office-based workers who had been working from home in the pandemic.

The delay in projects during the pandemic had led to inflationary pressures as well.

A group statement said: “Whilst the pandemic undoubtedly had an effect on turnover last year, it appears that most of the project awards that were delayed have now come to fruition this year, leading to a significant increase in turnover.

“This in itself has led to some problems on our sites where we have suffered from both labour and material shortages and latterly inflationary pressures.”

Additionally, tender prices were hit and there has also been a slowdown in awards. Goddard said, despite this, bidding opportunities remained strong and the order book exceeded £1.6bn. The workload in the year ahead is dominated by projects in the north west and south west regions.

Godard said: “The economic environment remains challenging. The emergence of high levels of inflation requires us to be ever more selective in our approach and agile in our delivery.”

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