This year’s CN100 ranking of the UK’s biggest construction firms has revealed that contractor profits surged by more than £1.17bn amid the easing impact of the pandemic on the sector.
Overall, aggregate pre-tax profit for the 100 largest firms came in at £1.17bn, compared with a loss of £40m last year.
Aggregate net cash was also up significantly, reaching £6.18bn, having been £4.35bn in 2021.
Revenue rose by just 3.9 per cent, from £61.33bn to £63.72bn.
EY-Parthenon UK and Ireland construction lead Ian Marson said the figures show more companies have been focusing on their profit and margin, following the immense impact of COVID on the sector.
“Many companies have decided ‘revenue is deliberately not what I am focusing on, to protect my family business’. If they are sensible, they are looking at margin, not revenue,” he said.
Of the 100 firms analysed, 56 had filed accounts for financial years ending after May 2021, by which time the impact of the first COVID lockdown had lessened.
The start of their reporting period 12 months earlier reflected a time when most contractors were back on site, and few jobs were paused afterwards.
The numbers therefore demonstrate a reawakening of the industry after sites opened up again, delayed projects restarted with aplomb and confidence returned to the sector.
Wates interim chief executive Philip Wainwright said: “I think we are through the COVID negativity.”
Those 56 firms saw a huge upward swing from a low point, as demonstrated by the CN100 2021, where they tabled an aggregate loss of £193.2m, compared with the £1.03bn profit total this year.
But there are still concerns over the impact of inflation and material shortages.
Industry leaders warned almost in unison that the sector was not in the clear, with John Sisk & Son chief Paul Brown telling Construction News that the “only option is to consolidate and go again”.
He said; “You don’t swim against this tide very successfully, and if you try to, you will be into choppy waters no doubt.”
Wates’ Wainwright added: “The whole impact of inflation is a wave that is probably going to subdue everybody’s profits in the industry [in the next year].”