A strong order book continues to fuel trading at Newcastle construction company Northern Bear, its boss has said in preliminary results.
Revenue and operating profits were broadly stable at the Prestwick Park firm in the year to the end of March. It comes as heavy rainfall throughout the period, though particularly in the second half, hampered otherwise strong results.
The results are the first since the appointment of former Esh Group man John Davies as chief executive officer from April 1, following a year at the firm working with group operations director Keith Soulsby, who retired at the end of March. Mr Davies said Northern Bear had grown gross margin to 23.1% from 20% by focussing on more profitable parts of the business and in careful contract selection, but that those gains had been offset by higher costs of £13.5m, up from £11.8m.
Read more: North East administrations fall during first half as construction sector continues to suffer
Read more: Firm behind multimillion-pound Tyneside cable factory vision welcomes Great British Energy plans
Some of that increase was down to investment in people, particularly in the Building Services division where management and workers received training in the hope the business can increase market share. There was also investment in fleet across the materials handling division and in decarbonisation technologies across the group's roofing business.
Overall revenue for the year was £68.7m, down from £69.7m the year before, while operating profit was raised at £2.4m, compared with £2.1m in 2023. Cash generated was down from £2.8m to £1.1m - a position said to have been impacted by the timing of Easter disrupting normal boosted cash inflows towards the end of March.
Potential future acquisitions were hinted at within the results as the the firm said its priority is now to invest in growth.
Most Read
Looking forward, Mr Davies said: "Our forward order book remains strong and should support our trading performance in the coming months, subject to any business-specific considerations noted in the trading statement above. As we have regularly reported, the timing of group turnover and profitability is difficult to predict, despite the continued strong order book, and our results are subject to monthly variability. We will continue to update shareholders with ongoing trading updates.
"We have made a satisfactory start to the FY25 and results to date have been in line with management expectations. That said, the new ventures referred to above will have a short-term impact on profitability due to investment in overheads (primarily people costs) expected to be circa £300,000 in FY25. We are targeting that these ventures will be trading profitably and generating cash by the following financial year, ending March 31, 2026. In the event that they do not progress as planned, we have not made any long-term cost commitments."
A final dividend of 2p per ordinary share was proposed, payable on September 25.