Rick Willmott, chief executive of Willmott Dixon, warned that spiralling inflation and materials shortages could result in some clients having to think again about their projects.
The privately owned construction company’s accounts for the year to 31st December 2020 show turnover reduced by 4% to £1.191bn (2019: £1.246bn) and profit before tax and goodwill down 34% at £11.9m (2019: £31.3m).
The pre-tax profit margin was trimmed from 2.5% to just 1%.
However, Willmott Dixon ended 2020 with no debt, £98.8m cash at bank (2019: £93.1m) and net assets up to £190m (2019: £183m).
Chief executive Rick Willmott says: “While the events of 2020 were completely unforeseen, I was extremely proud at how well our people adjusted to the challenges created by the pandemic. By quickly adapting our projects to meet the requirements of the CLC’s Site Operating Procedures, we were able to continue building for our customers in a safe manner. However, it was not possible to avoid Covid-19 impacting financial performance, and the task in 2021 is to repair that as much as possible.”
“Our teams have done a tremendous job securing 80% of budgeted work already this year, and our £1.35bn order book provides a solid platform for the next 18 months.”
“However, we are concerned for the industry because of the medium-term impact of Covid-19 on the global supply of materials. Spiralling demand and restricted supply could create a number of immediate pressures in our sector, including:
- rampant cost inflation in a generally fixed price environment will quickly erode supply chain margin
- unavailability of materials will delay project completions
- capital projects may no longer be financially viable leading to a hiatus in contract awards.
“These are clearly areas that the wider industry will need to monitor carefully.”
“With this in mind our focus is on bringing new ideas and solutions to support our customers as they also emerge from the impact of Covid on their organisations, and our national network of offices means we can respond very quickly with our local supply chains to their evolving property needs.”
He added: “We will also embrace the new ways of working that have come out of this past 12 months, such as a more agile and flexible approach to office and home working, and the use of technology to keep teams connected and allow collaboration in a way that was impossible only a few years ago.”
Looking to the future, Rick Willmott continued: “The Levelling Up agenda is creating opportunities for towns and cities to look at how they can invest in important projects that will breathe new life into high streets and create sustainable job opportunities in this post-Brexit period.”
“This could include a combination of updating and re-purposing existing property, like we are seeing with our refurbishment of local cultural landmarks like the Bristol Beacon, The Box in Plymouth, Stockton Globe, Danum Gallery, Library and Museum in Doncaster and EMD Cinema in Walthamstow, to the type of large-scale town centre regenerations we are involved with in Rochdale, Pontypridd and Rotherham.
“We are pro-actively looking at how we can help our customers get the most from the economic resurgence that is gaining momentum, along with the opportunities presented by the Towns, Future High Streets and Levelling Up funds to create local prosperity that re-balances the national economy. Our Development Solutions team is working with councils to reduce risk and add capacity to accelerate their plans to develop housing and other public infrastructure need to re-shape local areas, while our Collida product system and approach to innovative design and construction manufacturing provides a market-leading proposition to ensuring new property is climate change resilient by achieving the level of energy performance associated with Passivhaus standards, in line with the UK’s net zero carbon ambitions.”