Wates’ profit falls despite record £1.9bn turnover

Wates made a pre-tax profit of £33.7m in 2022 from a record turnover of £1.9bn.

The family-owned contractor, which is based in Leatherhead, Surrey, had a forward order book of £8.35m at the end of the calendar year with net cash of £153m. Its turnover rose by 16 per cent from 2021 (£1.5bn) and 36 per cent from 2020 (£1.3bn).

However, pre-tax profit dropped by £2.2m, or 6 per cent, from 2021. The group therefore had a 1.7 per profit margin in 2022, compared with 2.4 per cent in 2021. Profit was still comfortably above the £839,000 Wates made in 2020 during Covid.

Wates said the year contained “strong inflationary pressure, interest rates and other economic headwinds” and pointed out that its tax bill increased from £233m in 2021 to £313m in 2022.

The group had 4,021 employees across the year, building 4,626 homes and working on 683 construction sites. The business also managed and maintained 500,000 social housing properties as well as 701 commercial buildings.

Wates’ 1,722-person construction division turned over £958m – up year-on-year by 24 per cent – with an average project value of £43m across 51 sites. It completed projects including the Sandwell Aquatics Centre, one of the venues for Birmingham’s 2022 Commonwealth Games.

Last year, Wates also signed a contract for its largest-ever construction project – the £500m Envision AESC gigafactory, which will make electric vehicle batteries in Sunderland. At the end of 2022 the firm had carried out over £100m of work on the project.

The company’s 48-person development arm, meanwhile, turned over £123m, from a capital investment of £148m. It sold 414 homes during the year, with a further 15,812 homes in the planning pipeline. The group also has 127 homes across its Needspace flexible workspace brand.

Wates’ residential business turned over £310m, up by £42m, or 14 per cent, completing 739 homes in the year and selling 119. At the end of 2022, the division had a further 2,605 homes under construction and employed 365 people.

It’s 1,478-employee property services arm turned over £499m, working on 2,686 retrofit projects and fit-out projects valued at up to £30m.

Wates did not disclose pre-tax profit figures for its divisions, but stated that each of its businesses was profitable in 2022.

Wates chief executive Eoghan O’Lionaird, who joined the firm in February from marine and oil and gas contractor James Fisher and Sons, said: “These results in our 125th year represent a really strong performance in the context of a challenging economic environment.

“Each of our divisions have contributed strongly to profitability and I am delighted to see such consistency across the group. 2022 saw us continue our upward trajectory on turnover, reaching £1.89bn – the highest in our history.

“This high figure reflects the strong and stable family governance, hard work of people across the business, the scale of our ambition, our proven capability to manage largescale projects of strategic national significance, and our customers’ confidence in our ability to deliver for them, particularly in the public sector.

“We are in a strong, resilient position, with profitability across all our divisions, another record forward-order book, and a solid cash balance.”