Construction and interiors company Willmott Dixon reported strong headline financial results for 2019, but has warned that construction costs would “inevitably” rise because of the Covid-19 pandemic.
Rick Willmott, the chief executive, said that although the privately owned company maintained a strong forward order book, the concomitant supply problems and decline in productivity would affect projects during 2020.
“I think we need to be realistic that output reductions linked to social-distancing measures, coupled with a possible lag in the supply of some materials from overseas, will inevitably have a continued impact on project prices and programme timings in the short to medium term,” he said.
The predictions were made as the company unveiled results for the year to 31 December 2019. Pre-tax profit slipped from £37.5 million to £31.3 million and turnover also dropped from £1.32 billion to £1.25 billion, giving the company a 2.5 per cent pre-tax margin. The company ended 2019 with cash reserves of £93.1 million, a rise from £90.5 million in the previous year.
Repeat business accounted for two-thirds of all orders in 2019, and 75 per cent of the company turnover was procured through framework contracts. Its interiors business saw a turnover of £149 million (2018: £125 million), and the construction division turnover was £1.097 billion (2018: £1.198 billion)
Willmott said the contractor’s healthy performance in 2019 gave the company a “good platform” to face the “challenges created by Covid-19”.
But he also warned that some projects might not go ahead as expected. “While we have a healthy forward order book that stands at more than £1 billion, it’s inevitable that some projects may be delayed or postponed owing to the current economic situation created by Covid-19.”
The contractor currently has all of its sites open and only three were closed briefly at the peak of the Covid-19 outbreak. One-way systems and GoPro cameras had been deployed to monitor work and maintain site safety, said Willmott.
However, he pointed out that the new working measures would hamper progress.
“We now expect all sites to remain open, although Covid-19-related safety measures and availability of materials will mean that output levels will be reduced compared to before the pandemic. While this will inevitably impact upon pre-pandemic expectations in terms of timescales and budgets, I really appreciate how supportive our customers are being on this issue.”