Construction company Esh Group says it is bouncing back with a £300m order book after the pandemic plunged it into the red during the “most challenging year in the group’s history”.
The Durham business, which operates across the North East and Yorkshire, has published accounts for 2020, which show how the previous year’s operating profit of £800,000 was converted to an operating loss of £3.7m.
At least three months of shutdown was followed by contract start delays, production constraints through repeated isolation requirements and material shortages, all of which combined to have a major impact on the group. Gross profit margins fell to 2.4% from a comparable 4% the previous year.
Read more: find more property stories here
Despite the profit hit, turnover grew from £212.6m to £236m, with growth emanating from the company’s previously announced organisational changes and revised growth strategy. It also ended the year with £15.4m in liquidity and navigated the year without drawing at any point on its £7m credit facility.
Andy Radcliffe, the chief executive of the group – which employs 750 people and supports four times that number through its supply chain – said that although the challenges of the pandemic are far from over, the company has entered 2021 with a solid foundation for growth in both liquidity and profitability.
He said: “We commenced the year with a record order book approaching £300m, a level of liquidity not seen in many years, and a business strategy that on all measures is performing well.
“The group has recorded strong profitability through to the end of quarter three, and the board expect this to continue for the remainder of the year and beyond.
Most Read
“Going forward we’re very profitable this year, we’ve put the major impact of Covid behind us and our business strategy was well placed before Covid hit but it had a big drag on the P&L for obvious reasons.
“Our business plan is now back on track, we’ve generated some nice profits and it’s looking good. The major headwinds are around material supply and availability, and it’s volatile at the moment – we’re seeing it lurch from one commodity to another and it depends on who can get capacity and who can get some drivers for wagons, to ship the product.
“At the moment we’re managing it. We’re juggling, as everyone else, and we’re managing through it, keeping our programmes in line. Frankly we do have some very loyal and supportive supply chains who are looking after us, and that’s always good to be able to call in those favours when you need them.
“I’d say it’s not easy but it’s manageable and as far as our business plan is concerned we’re certainly on track with what we plan to achieve for this year.”
Esh Group is currently involved in a raft of contracts covering commercial property, housing and infrastructure programmes including the £40m Sunderland Strategic Transport Corridor, and the joint venture it has with engineering consultancy Stantec on a Northumbrian Water infrastructure framework contract.
Mr Radcliffe said the group is continuing to battle chronic levels of materials shortages and cost inflation, but that it is realigned to be simpler, leaner and laser focussed on segments of the market that continue to show incredible resilience.
He added: “We’ve got a number of housing schemes across the region in the North East and Yorkshire. That market is hot at the moment, so we’ve positioned ourselves really well with some land opportunities, bringing land to bear for our clients which is driving solid growth in that space.
Don’t miss
“Commercial build-wise, we have a number of projects on the go – the Travelodge and retail scheme at Hexham bunker, which is going well, and in Yorkshire we have the Ironworks project Holbeck’s Urban Village.
“We’re active in all those sectors and our business strategy has been very much to rationalise the Esh Group, from what was previously a very sprawling, conglomerate of largely disconnected business units into something much more confined, much more focused on the elements of the markets we want to pursue. Frankly it’s paid dividends and had it not been for Covid we’d have been into year two of our business strategy and delivering some exceptional results.
“Covid put us back a peg but we’re back on track and 2021’s going to be a strong year for us.”
Sign up for the new BusinessLive Commercial Property newsletter here.