The firm said it had also started to see early signs of labour and supply constraints as the country’s economic health improved.
Experienced bricklayers are already commanding a premium with some being paid 20% more than six months ago as wages top the £40,000 mark on some sites.
Across the group a strong uplift in house building saw the firm deliver record pre-tax profits up 17% at £74m on stable turnover of £1.47bn.
But construction margins slipped from 2% to 1.7% after a 20% fall in operating profit to £15.1m.
Greg Fitzgerald, chief executive, said: “Construction has achieved another impressive performance against the background of a market that remains challenging, by focusing on its principles of disciplined contract selection, protecting margin and prioritising cash management.
“There are encouraging signs of an improving market on which we are well positioned to capitalise.”
He said the private sector recovery was being led by leisure and hotel orders along with more work related to housing developments.
Galliford Try also saw the first AMP6 repeat work coming through, but Fitzgerald warned the firm remained cautious for reasons ranging from concerns about consumer spending to ability to finance their projects.
“While margins are expected to reduce, the business currently has secured 87% of its projected workload for 2014, while maintaining its order book at £1.7bn.”
He added: “Both construction and housing businesses are, against a background of some labour and supply challenges, maximising production to respond to strengthening customer demand and improved conditions.”
Galliford Try divisions at a glance
- Housing: Turnover £640m (637m); profit £83.5m (£75.1m); margin 13.1% (11.8%)
- Construction: Turnover £913m (£925m); profit £15.1m (£18.9m); margin 1.7% (2.0%)
Building: Turnover £406m (£364m); profit £6.5m (£8.4m); margin 1.6% (2.3%)
Partnerships: Turnover £90m (£90m); profit £2.2m (£1.7m); margin 2.4% (1.9%)
Infrastructure: Turnover £416m (£407m); £6.4m (£8.8m); margin 1.5% (1.9%)
Galliford Try’s housing arm benefitted from the southern housing recovery where three quarters of its business is carried out.
A 11% rise in profits was driven by a 5% rise in average selling price to £262,000 and cost efficiencies rather than sales growth, which completions actually marginal down on the previous year at 2,932.
Margins rose from 11.8% to 13.1% as the focus remain on developments with higher returns.
Fitzgerald said: “We are on course to deliver a house building operating margin of 17-18% by 2018.”
