McAlpine suffers £23m loss after waste projects hit

Aaron Morby 6 years ago

Sir Robert McAlpine plunged £23m into the red last year after taking a big hit on three energy projects.

Chief executive Hamer says McAlpine is now focused on raising its portfolio of lower risk construction management work
Chief executive Hamer says McAlpine is now focused on raising its portfolio of lower risk construction management work

The firm today confirmed it was pulling out of the energy from waste sector after running up the losses on the projects which have been booked as a £37m exceptional in accounts for the year ending October 2017.

Chief executive Paul Hamer said: “Over the course of 2017, Sir Robert McAlpine worked on three energy projects, all of which have incurred considerable losses.

“Two of these were ‘energy from waste’ projects which were completed during the year; the final accounts have been agreed with the client and all claims settled.

“The last project is forecast to be completed by October 2018.”

After exceptionals Hamer said McAlpine delivered underlying profits of £14m and had secured an order book and pipeline which was at its strongest for over 10 years.

He added: “While the UK construction market remains highly competitive, the construction profits, before exceptional items, of the group have increased, albeit margins remain unsatisfactory.”

Revenue for the year edged up 5% to £892m.

Hamer said the firm was now growing its share of the construction management market, which would provide a strong income stream with a lower level of risk than traditional contracting.

McAlpine has started work on Phase 3A of the Battersea residential development worth £700m.

“Looking forward, we forecast that construction management will represent as much as 50% of Sir Robert McAlpine’s workload in London.

“The proportion of turnover from frameworks has increased as Sir Robert McAlpine continues working with British Land at Broadgate in London commencing two new projects and, in the healthcare sector, through the P22 framework.”

Hamer said: “We are very positive about Sir Robert McAlpine’s prospects for 2018 and beyond with the level of secured turnover in the pipeline the highest it has been in recent years.

“However, we will remain cautious and continue to move the business away from fixed price contract risk to a more collaborative approach with our clients.”

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