CONSTRUCTION giant Tolent has reported a big jump in revenues which has showed a return to growth after three years of seeing its workload slide.
The Gateshead-based firm, which operates nationwide and has offices in Stockton, Leeds, Manchester and London, said turnover jumped by 28.3% to £104m in the year to the end of December.
It said the new year had started with an improved order book but the construction market as a whole remained “very difficult”.
Tolent said: “Developers are still unable to raise funding to commence projects due to the tighter criteria required by the lending banks and the general contraction of work in the construction sector as a whole has led to increased pressure on margins.
“This market is not expected to improve significantly over the next two years.”
Chairman John Wood said he expected turnover to rise to £130m in the next 12 months although profits are unlikely to grow much.
“We’re getting the business and the conversions but the competition is so tight we’re getting paid washers. The margins are so tight. It will get better eventually but I don’t know when.”
During 2011, Tolent completed a number of high profile projects including the £8.9m Baltic Design Centre in Gateshead for Terrace Hill, a 184-bed hotel for Apex Hotels in London and a 22-storey, £12.8m student accommodation scheme in Leicester. Work also started on a £18.7m distribution warehouse in Wynyard and an £8.8m Morrisons supermarket in Morpeth, which is due to open in spring next year.
Tolent, which employs around 430 people, reported a rise in operating profits to £459,000 from £439,000, while pre-tax profits jumped to £610,000 from £577,000 in 2010.
“The directors considered the result for the year to be disappointing but satisfactory in the economic circumstances,” Tolent said. “The directors look forward to a profitable 2012 whilst recognising it will be a challenging year in view of the economic climate and continued austerity measures.”
And it warned that margins would remain low because of the competition in the sector, with firms tendering for and negotiating contracts for very small margins.
“The actions of these firms create a market where it is very difficult to improve margins in a time when developers and clients are passing greater risks on to the contractor,” said the company. The contraction of the public sector construction market will maintain these conditions for the forthcoming period.”
The company says its strategy is to grow organically but that it would consider “selective acquisitions” if suitable opportunities arose.
The business, which was set up in 1983, works across construction sectors including new build, refurbished and fit out offices, industrial, housing, petrochemical, pharmaceutical, commercial, the motor trade, leisure, civil engineering and waste.