Sir Robert McAlpine margin falls below 1%

Aaron Morby 2 years ago
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Sir Robert McAlpine continues to battle to restore margins to industry averages after a year of supply chain, labour availability and inflationary pressures eroded profitability.

The firm revealed that longer term projects due to finish this year had seen costs jump by £33m more than expected.

In latest published results for 2022, the group delivered a 0.9% operating margin down on the prior recovery year at 1%.

While revenue edged up 16% to £1.09bn, operating profit remained static at £9.6m.

In May this year, the firm revealed it was dropping its regional operating model in favour of a national, sector-focused model.

The firm is now prioritising sectors where it has been most successful in a bid to improve margins.

Target markets include healthcare, commercial offices, industrial, as well as the heritage and complex schemes delivered by its Major & Special Projects team.

It is simultaneously growing the rail, transport and nuclear sectors of its infrastructure business. This will drive profitable growth and minimise its exposure to ongoing geo-political and market risks.

The strategy will see a strong pivot to infrastructure/cost plus, and away from fixed-price work and bring a step change in mix between Buildings and Infrastructure business over the three-year period.

The streamlining will cost £8.4m over the next 12 to 18 months but is expected to realise annualised savings of £20m when fully implemented through a leaner group support centre.

McAlpine said it was likely that revenues would stay broadly flat over the 2023-2025 period as it transitions to a sector-based delivery model.

The privately-owned contractor ended last year with cash of £99.5m, slightly down from £106m at the year-end.

 

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