好色先生TV

It was all starting to come together for the UK鈥檚 specialist contractors 鈥� at least until 23 June.

After years of suffering wafer-thin margins following the 2008 recession, profitability increased in 2015/16, according to an analysis of the most recent accounts of Britain鈥檚 top specialist contractors, compiled by 好色先生TV and data company Barbour ABI.

This year鈥檚 table of the 15 biggest firms in each of the nine most important trades shows that average margins were up to 4.4% for 2015/16 based on pre-tax profits of 拢485m. This represents a substantial improvement on the figure of 1.7% from last year鈥檚 exercise.

Judging by this year鈥檚 results, the risks involved in scaffolding were worth the rewards last year, with margins more than doubling from an already relatively healthy 4.9% to 10.8%. The next most buoyant trade to be in was steel cladding, where the 15 biggest firms recorded an average margin of 7.3%. Flooring and demolition also reported margins of more than 5%.

It鈥檚 all about margin and not volume although, if you do it right, the volume follows

Vince Corrigan, Keltbray

Groundwork missed this benchmark by a whisker on 4.9% as Keller鈥檚 UK operation and Cementation Skanska returned to profit after recording substantial losses in 2014/15.

At the bottom of the table in terms of returns was the fit-out sector, where the 15 biggest firms recorded an average margin of 2.6%, due to anaemic profits across the board rather than losses. Steel contractors just pipped their fit-out colleagues with an average margin of 2.7%, weighed down once again by Mabey Bridge, which reported a loss of 拢13.5m. The heavyweight sector of the specialist world 鈥� M&E 鈥�  showed an average margin of 3.1%.

Rudi Klein, chief executive of the Specialist Engineering Contractors鈥� (SEC) Group, says he was pleased that profitability levels are starting to recover in M&E, which remains by far the biggest specialist trade sector in terms of total turnover.

A reduction in the number of firms competing for work will probably have helped following a series of high-profile exits from the sector, he says: 鈥淲e lost a lot of companies during the recession because of insolvencies, so the competition is slightly lessened.鈥�

However, for many firms across M&E, margins remain 鈥渉orrendously low鈥�, he says: 鈥淚f our members are making more than 2% per annum, they are lucky.鈥�

Conor Leyden is managing director of the North-west based remediation specialist LK Group. He says that, despite the relatively 鈥渂uoyant鈥� state of the market over the past year, pushing up margins remains a struggle.

Unless we improve the sustainability of the specialists, we may not have the extent of expertise we have now

Rudi Klein, Specialist Engineering Contractors鈥� Group

鈥淥verall, our profit margin is increasing but it鈥檚 still quite tight and competitive. Lots of clients still have a recessionary mindset so are always looking for the best possible price.鈥�

David Hurcomb, chief executive of M&E contractor NG Bailey, emphasises that it is a mistake to chase turnover by taking on poor-quality contracts.

鈥淲e鈥檝e seen too many companies grow so rapidly that they can鈥檛 meet their commitments,鈥� he says.

There is a balance to be struck when running a business, he acknowledges: 鈥淵ou are here to make a profit and, if you don鈥檛, all other things will fall away.鈥�

For Vince Corrigan, group executive director at Keltbray, healthy profitability is essential for maintaining the fleet of expensive equipment required by a company like his. 鈥淚t鈥檚 all about margin and not volume although, if you do it right, the volume follows,鈥� he says.

Despite recovering margins, the ability to support future investment is a headache for M&E contractors, says Klein. 鈥淯nless we improve the sustainability of the specialists, we may not have the extent of expertise we currently have in the sector,鈥� he says.

A more immediate worry, though, is the ramifications of the UK鈥檚 vote to leave the EU.Klein says he is yet to see much evidence of a Brexit impact on his member firms鈥� workloads.However, pointing to figures showing that the number of contracts being let is about 10% less than it was this time last year ago, he says that firms are right to be wary about future workloads.

Lots of clients still have a recessionary mindset so are always looking for the best possible price

Conor Leyden, LK Group

鈥淭here is an undercurrent of concern about where we will end up in a year or two. The concern is that there could be knock-on effect on demand.鈥�

LK鈥檚 Leyden says he is seeing little impact from Brexit-related uncertainty on the housebuilders that he works with.

鈥淥ne client paused momentarily to see how the dust would settle but within a few weeks, things were back to normal,鈥� he says.

And Gary Sullivan, co-founder of Wilson James, was relieved by AXA鈥檚 recent decision to press ahead with its 22 Broadgate tower project in the City of London, which the logistics specialist is working on.

Like many other specialists, Sullivan was heartened by the government鈥檚 recent decision to finally give the green light to the third Heathrow runway and the replacement nuclear plant at Hinkley Point in Somerset.

For the time being, he says, the firm is turning away enquiries. 鈥淣ot being too smug but we want to be able to serve the clients we have long-term relationships with.鈥�

His main worry about the UK鈥檚 withdrawal from the EU is the impact it will have on access to skilled labour. He says: 鈥淲e are concerned about what鈥檚 going to happen with migrant labour. I don鈥檛 imagine Theresa May is going to tell people to pack up their bags but, if she does, it will cause problems.鈥�

David Frise, chief executive of fit-out association FIS, agrees that labour is a big concern, given his sector鈥檚 reliance on skilled workers.

Another headache for his members is escalating costs of imported materials from the rest of the EU following the post-referendum crash in the value of the pound.

Factors like this suggest that the recent relief is likely to be short lived for Britain鈥檚 army of specialist contractors.