Willmott warns of ‘hiatus in contract awards’ due to inflation
Turnover in the North rose slightly to £218m in 2020 and helped maintain profitability for the privately owned national contractor, despite pandemic setbacks.
Willmott Dixon’s major projects in the region include Genr8 Developments’ retail-led Riverside in Rochdale town centre where the first phase completed and work is now starting on phase two.
The £54m Manchester College in the city centre continues on track. In Liverpool, after completing King’s Dock car park to replace the facility by fire, the contractor is set to deliver the new Merseyside Police HQ this year.
A large project to start on site in 2021 will be Stockport Interchange for Cityheart and Rise Homes, with 200 apartments and a new park above the transport interchange.
Anthony Dillon, managing director for Willmott Dixon in the North said: “We’re proud to be a business built on managed, sustainable growth, and our financial results reflect the resilience of our approach, and of course, the expertise, commitment, and pride of our people, customers and partners.
“Against the challenges of 2020, our incredible team kept every single one of our North West sites operational and safe. Supporting our communities in these times of uncertainty is more important than ever, and we are committed to continuing to deliver brilliant buildings, setting the standard for sustainable construction, working with regional supply chain partners and creating local employment opportunities.”
Nationally, turnover was £1.191bn, flat with 2019. The business was debt free at December 2020 and cash at bank improved during the year by £5m to £98.8m. Pre-tax profit was £11.9m (2019: £31.3m) at a margin of 1% (2019: 2.5%).
Rick Willmott, group chief executive, added: “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…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: 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.”
Two thirds of orders were repeat business and around the same amount was procured via frameworks. The business had an order pipeline of £1.35bn going into this year.
The company agreed a sustainability-linked credit facility with HSBC UK, Lloyds Bank and Santander on the basis of aiming to be zero carbon by 2030. The company’s loan facilities now total £50m and are “undrawn with no plans to do so”.
Willmott Dixon said it reduced carbon emissions relative to turnover by 13% between 2019 and 2020 and by 66% since 2010, exceeding its target of 50% reduction target by 2020.
Willmott said the group’s “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.
“The challenges of 2020 have not diminished our values, beliefs and desire to lead from the front in helping construction transition to a low carbon industry that is also a diverse and inclusive place to work for a new generation of people.”
