The chairman of construction firm Tolent has said he is disappointed by the firm’s sales performance for the last financial year, despite seeing sales build by 4.8% to £109m in a struggling industry.
The Gateshead-headquartered firm, which also has offices in Thornaby, Leeds, Manchester and London, has seen continued improvement in its revenues for the year ended December 2012, but total operating profits over the year slipped to £415,000 from £459,000 and pre-tax profits were also down by 7% year-on-year to £567,000.
The firm carries out a wide range of construction and civil engineering projects, across sectors as varied as industrial, commercial, residential, petro-chemical, civil, public and health – diversity which it said gives some protection against any downturn in activity in certain markets.
Over the course of the year, it successfully completed a series of projects around the UK, including several landmark programmes in the North East such as a distribution warehouse for Clipper at Wynyard, costing £18.5m, a £3.4m training barn for Sunderland AFC, a new hotel in Whitby costing £3.2m and civils work worth £12.8m to new energy and waste facility on Teesside.
Operating margins declined over the 12 months, achieving 0.38% in 2012 compared to 0.43% the previous 12 months, but the company, which has more than 400 employees across the UK, also reported an encouraging forward order book in latest accounts filed at Companies House, as well as a number of opportunities.
The latest accounts also showed average headcount for the year went down by 26 to 405.
However, chairman John Wood said he was very disappointed in the turnover and he does not expect to see any significant lift for some time, while companies across the construction sector continue to operate within “suicidally” low margins that are threatening to drive firms out of business.
Wood said companies are continuing to tender and negotiate contracts at very low margins, creating a market where it is difficult to improve margins at a time when developers and clients are passing greater risks on to the contractor.
Funding constraints placed on both private developers and the public sector has led to a general contraction in the market continuing the pressure on margins.
Wood said: “I’m really disappointed in the turnover. The construction sector is as bad as I’ve seen it and I’ve been through a few of these recessions over the past 30 years. There are a lot of suicidal prices around.
“Certain sectors are not so bad, such as social housing and railworks, but you have to be on the framework for those jobs and we aren’t getting sniff at them. We can’t even bid for work on SCAPE because we’re not deemed big enough to price them.
“What I will say, however, is that I’ve been through recessions, and in 1995, it was London that started to pick up first, then the ripple effect went across the country.
“Our London office has had lots if enquiries recently and hopefully we’ll get some decent orders. Hopefully that will then spread.
“We’ve not given up yet – I’m a Sunderland supporter so I’m weaned on adversity.”