Wates soars to £40m record operating profit

Aaron Morby 3 months ago

Family-owned building contractor Wates has reported its highest-ever operating profit of £40m after a bumper year of orders.

Allen says that while there are concerns about inflation and competition for materials and talent, key markets offer opportunities for strong growth ahead in housing and the push for net zero
Allen says that while there are concerns about inflation and competition for materials and talent, key markets offer opportunities for strong growth ahead in housing and the push for net zero

The business secured £2.3bn of new work last year seeing its forward order book swell 7% to a record £7.1bn.

David Allen, chief executive, said Wates Group was entering its 125th year primed for further growth and setting ambitious sustainability targets.

He said: “We see construction growing by £100m this year and more again in 2023 as major project wins like our advanced car battery gigafactory project move to full construction.

It is incredible that in a year that was frequently – and for extended periods – very challenging, we continued to work safely and produced the highest operating profit in Wates’ 125-year history.”

Despite the challenges of last year, Wates’s regional expansion and major framework wins saw total group revenue rise 12% to £1.6bn, generating a 5% uplift in pre-tax profit to £37m.

Allen said Wates’ growth strategy was supported by significant new investments in residential and developments businesses, and by investments in data and modern methods of construction.

He said: “While there are concerns about the impact of inflation and competition for products, materials and talent, the group’s key markets, such as the housing sector, continue to offer lots of opportunities for profitable growth.

“Despite the economic and political pressures that are affecting everyone right now, the strength of our performance in 2021; the size of our order book; our proven ability to help customers meet their sustainability goals… mean we’re looking forward to the future with confidence and excitement.”

Operating margin across the Wates Group rebounded from the Covid-impacted 0.3% in 2020 to 2.5% last year.

Across the key operating divisions, Wates Construction cemented its place as a major schools and offices builder, while expanding into healthcare sectors.

This saw it generate a £19m pre-tax profit from a turnover up 51% at £772m.

Wates Property Services increased turnover by 14% across its three divisions to £476m, with its facilities management business, Wates FM, experiencing the best trading year in its history.

Wates Residential increased its revenue by 75% to £268m, while lifting its headcount by nearly 100 staff. 

The group saw average net cash improve strongly from £88m to £130m in the rebound year.

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