Profits have jumped substantially at North East-based construction group Esh on the back of a strategy to focus on strong demand sectors.
The County Durham based group saw operating profits leap to £5.24m in 2024, from £2.9m the year before. Soon-to-be-published accounts, seen by BusinessLive, show the privately-owned group boosted turnover to £265.2m from £260.5m in the same period.
Esh says the gains have come on the back of its decision to target sectors with strong and sustainable demand, via its civil engineering, affordable housing, commercial build and private housebuilding divisions. It is now said to have £2bn of visibility in its order book, giving confidence in future revenues.
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Chief executive Andy Radcliffe said: "We’ve made real progress as a business over the past few years as we fundamentally repositioned our group to target the most attractive segments of the market, and we’re in a really good place right now – which, many would argue is at odds with the broader industry narrative that suggests challenging trading conditions are persisting.
"During the first half of 2024, we closed out the majority of contracts that had been impacted by the aggressive rise in cost inflation over the previous two years, and in the second half of the year, every division of the group performed exceptionally well. With liquidity at an all-time-high, expanding gross profit margins, and a business plan delivering as intended, our group is well-positioned for continued success, with 2025 set to show an even greater improvement in profitability."
Mr Radcliffe added: "That being said, we are certainly not being complacent – we must continue the relentless execution of our group strategy – a strategy that saw us through the challenging times during and after the pandemic. This, coupled with our prudent approach to working capital management, sensible work-winning strategies, and quality and safe delivery, will provide a solid foundation for a prosperous future.”
Esh said delivery improvements in its contracting and development divisions had helped boost gross profit margins to 8%. At £36m the group's cash balance is the highest on record, and the business has an undrawn, £6m credit facility. About £2m was invested in the year on more sustainable plant and equipment to support carbon reduction ambitions.
The 800-strong contractor has been involved in high profile schemes such as the restoration of the Tyne Bridge, Stockton Waterfront Urban Park and the 750-home Seaham Garden Village. It was also recently appointed as sole delivery partner for Northumbrian Water Group's £160m wastewater networks repairs and maintenance framework – an eight year deal which the group said has primed it for more work in the sector.
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And in the affordable housing sector, Esh has expanded its delivery across the North East and Tees Valley through competitive tenders and land-led operations - and expects to see a 45% rise in new homes delivered by the end of this year. It is a key delivery partner for Gentoo's £170m 'Gentogether' programme that provides a 10-year pipeline of work for the group's refurbishment teams.
Mr Radcliffe added: "Our long-term vision is clear and we are strongly positioned to navigate the ups, downs and challenges that all businesses face, particularly in the construction industry. I’m genuinely proud of the dedication shown by everyone in the business – their incredible hard work, technical brilliance and laser focus on delighting our clients has helped shape the strong position we are in today. And, as ever, we are enormously grateful to our valued clients and our loyal supply chains for their continued support."