Galliford Try will not seek work on large, fixed-price infrastructure projects after two legacy contracts caused a drop of almost 60% in the firm’s pretax profits.
Although revenue was up on last year by 6% to £2.8bn, pretax profit was down 57% to £58.7M from £135M for the same period of 2016.
The profit drop was impacted by a £98M loss largely due to high-risk work on the Queensferry Crossing and Aberdeen Western Peripheral Route projects in Scotland, while £1M was lost to Galliford Try’s aborted merger with Bovis Homes Group.
Galliford Try chief executive for construction and investments Bill Hocking told New Civil Engineer that the group would now steer clear of major infrastructure PFI schemes, such as the Lower Thames Crossing.
“I think there is an opportunity for us to grow infrastructure in transportation, in energy, in water and wastewater and so on, and we’re concentrating on that,” he said.
“We’re looking at that in a framework-type environment…we’re not going to do any more big, one off, lump sum, fixed price infrastructure projects.”
However he added that where terms and conditions are considered sensible, Galliford Try will continue to work on large infrastructure projects in JVs.
The firm expects to hit margins of 2% by 2021, although Hocking said he would like to see 3% in the longer term. While the group’s Linden Homes division performed well by increasing revenue from ££840M in 2016 to £937M, its Construction arm delivered a 0% margin before exceptional items, which brought it to -5.8%.
In Infrastructure revenue was up from £513M in 2016 to £555M. The group won places on frameworks with Scottish Water and Gatwick Airport among others.
Galliford Try chief executive Peter Truscott added: “Entering the new financial year, we remain cautious about the impact of the current political uncertainty and the medium-term outlook for the macro economy.
”However, all three businesses have clearly defined plans as part of our 2021 strategy, providing the Group with confidence in its ability to deliver a strong performance even in a period of lower growth in the wider economy.”