Laing O’Rourke makes a £288m loss

Grant Prior 3 months ago

Laing O’Rourke made a pre-tax loss of £288.1m for the year to March 31 2023 as rampant inflation and problem jobs blew a hole in the books.

Group accounts published this morning show revenue rising to £3.4bn from £2.9bn last time.

But a pre-tax profit of £2.7m last year became a loss of £288.1m following contract problems across the globe.

The Europe hub made a pre-tax loss of £148.7m from a £56.3m profit last time as turnover grew to £2.18bn from £1.84bn.

In Australia a £143m provision on a historic contract dispute saw pre-tax losses hit £101.7m from £6.7m last time from turnover up to £1.19bn from £1.13bn.

Group chief financial officer Rowan Baker said:“Together with the whole UK construction sector, we were presented with extremely challenging market conditions during this trading period.

“Unprecedented inflation impacted margins on a small number of our fixed-price projects in the UK. And while it had no immediate cash impact, provision for an exceptional item on a legacy project in Australia added to our loss.”

Baker added that the group had a record order book of £10bn and has made a strong start to the current financial year.

She said: “We have seen strong performance across the business in the first half of the current financial year. Our revenue increased 22% versus the same period in the prior year, and results are well ahead of management’s expectations at £31.4m EBIT.”

Chief Executive Ray O’Rourke was due to step down this time last year but decided to stay at the helm for another two years due to turbulent market conditions.

O’Rourke, said: “During FY23, geopolitical upheaval had profound inflationary effects, impacting the global economy, households, the wider sector, and our business.

“Official figures showed inflationary costs for the sector peaked at 26% during 2022, the biggest impact on construction in 40 years.

“The work we have done over a number of years has ensured Laing O’Rourke remains a resilient business and I thank all our colleagues for their hard work.

“With a record order book and a return to profitability in the first half of FY24, I remain very positive about the future.

“We continue to win work in our priority sectors, fuelling our strong order book growth and at the same time helping us to reduce our exposure to wider market conditions beyond our control.

“Our investment in the products, digital tools, and systems to unlock the productivity, quality, and safety benefits of advanced manufacturing underpins our strong sense of optimism about the outlook for the business.

“I am excited about our plans to deliver infrastructure projects of significant size and complexity in a new way.”

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