Willmott Dixon chief executive Rick Willmott has expressed concern for the construction industry because of the medium-term impact of covid-19 on the global supply of materials.
Willmott warned of “spiralling demand and restricted supply” creating pressures on the sector including:
- “Rampant” cost inflation in a generally fixed price environment that could erode supply chain margin
- Lack of availability of materials delaying project completions
- Capital projects may no longer be financially viable, leading to a hiatus on contract awards
Willmott’s cautious tone came as the business unveiled its accounts for the year to 31 December 2020. Willmott Dixon’s turnover declined to £1.19bn, down from £1.25bn the year before. Its pre-tax profit dropped to £11.9m for the year, down from £31.3m, with its pre-tax profit margin slipping from 2.5% in 2019 to 1% in 2020.
Nonetheless, the business has an order book of £1.35bn and cash at bank of up to £98.8m – an increase on the £93.1m it had in 2019.
The business had no debt as of December 2020 and has also secured what it claims is an industry-first, sustainability-linked credit facility with HSBC UK, Lloyds Bank and Santander, on the basis of its target to reach net zero carbon by 2030. The business has an undrawn loan facility of £50m.
Willmott said: “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.
“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.”
