Contractor hits 3.2% margin and predicts that more work will be won by bigger firms in future
An increasingly small number of contractors will win large jobs in the UK, according to Richard Gregory, chief executive of HBG.
Announcing that the UK arm of Dutch parent company Royal Bam Group has broken the 拢1bn turnover barrier, Gregory said the top of the market would consolidate over the next few years.
He said: 鈥淲ith the tendency for large framework deals it鈥檚 a question of whether you鈥檙e on them or not. We are, but medium-sized players may have to club together to survive.鈥�
As part of its drive for larger deals, HBG has moved into more complex jobs and now has seven deals worth more than 拢100m on its books, as opposed to none four years ago.
Turnover at HBG was up 18.2% from 拢882m to 拢1bn in the year ended 31 December 2007. Pre-tax profit grew from 拢42m to 48.7m. This included 拢947m from its construction division, which posted a pre-tax profit of 拢30.2m. This equated to a margin of 3.2%, compared with an industry norm of about 1.9%.
Gregory said: 鈥淢argins are generally lower because of one or two problem jobs. We managed to avoid that situation in 2007.鈥�
He said the effects of the credit crunch had not yet been felt, but that the situation could change in the early summer.
HBG鈥檚 property division disposed of seven commercial developments last August, which left the arm 鈥渨ell positioned in advance of credit squeeze鈥�.
Royal Bam increased pre-tax profit 81% to 拢340m and praised HBG UK鈥檚 鈥渆xcellent contribution鈥�. Turnover was 拢7.1bn, up from 拢6.9bn.
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