Buckingham Group upbeat for 2020 despite £100m sales fall

Aaron Morby 1 year ago

Buckingham Group Contracting is forecasting a 16% fall in previously predicted record revenue this year with margins sliding from 2.5% to 1%.

Chief executive Mike Kempley says Buckingham Group is well placed to weather impact of coronavirus on construction
Chief executive Mike Kempley says Buckingham Group is well placed to weather impact of coronavirus on construction

The main contractor remained confident of a healthy outlook this year and next after entering 2020 with record orders, zero net gearing and £57m in cash.

Chief executive Mike Kempley said: “This has put the business in a strong position where it is less reliant than ever on securing new short to medium term work at this critical time.”

He said that just four projects – amounting to 7% of revenue – were paused for more than one week with the majority of Buckingham’s 50 live projects being safely progressed.

Reporting stable revenue last year of £486m and pre-tax profit at £10.2m, Kempley predicted that this year’s revenue would be down £100m on the record £600m forecast.

He said: “The effect of lost margin on the £100m volume reduction and the cost of delays and the mitigation measures that have and will become necessary has also been assessed.

“This has depressed the target profit margin for 2020 from 2.5% to 1%.”

Kempley said Buckingham Group’s position as a leading contractor in the logistics, infrastructure and rail sectors boded well with no indication so far that medium to long term workload in these markets would be severely affected.

He said: “The Covid-19 pandemic and Brexit are highlighting the weaknesses of the global supply chain and just in time delivery model of UK manufacturing and retail sectors.

“These factors are driving demand for warehousing and assembly facilities and it is unlikely that this trend will be reversed in the medium term.”

He said that the board had taken swift action to contain costs with directors taking up to 50% temporary salary cuts and senior managers 20% cuts.

Selected offsite staff also accepted pay cuts of between 6% and 17.5%, with 10% of staff placed on furlough.

“The record levels of secured workload for 2020 and 2021 have put the business in a relatively strong position,” said Kempley.

He added: “It is very reassuring that no live or new projects have been cancelled by any customer.”

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