Laing O’Rourke has announced a trading loss of £245.6M for the year ending 31 March 2016. It is the group’s first loss for 15 years.
UK government austerity measures dating back several years, combined with a recession and a large Canadian PFI hospital project have all contributed to the loss, according to the company. It expects to return to profit at the end of the 2017 financial year, with an anticipated £3bn revenue.
“The genesis of this deterioration in profitability is rooted in the fact that coming out of a recession that had a negative impact over some six years (2009/14), it would have been difficult to avoid the severe headwinds our industry has endured through this period, which drove margins down to painful levels, alongside revenue reductions,” said chairman and chief executive Ray O’Rourke.
We all know that when recession starts, our industry in particular enters a race to the bottom – regrettably Laing O’Rourke joined in
Austerity measures announced by the government in October 2010 hit the group’s forward order book, removing £2.7bn from its pipeline.
“We all know that when recession starts, our industry in particular enters a race to the bottom – regrettably Laing O’Rourke joined in,” said O’Rourke.
“I can reconcile the losses to a number of projects that are now complete and handed over and a particularly difficult large project in Canada, on which I am pleased to announce we are on track to deliver the project in accordance with the mutually agreed revised timetable.”
However, looking forward O’Rourke said that the UK market “dramatically improves” with the advent of Hinkley, High Speed 2, Heathrow, Tideway and more housing.
“As a private company, the responsibility for its performance rests with me as founder. In making this announcement, I want to assure all our stakeholders that our company is adequately financed, has returned to profit in FY17 and is therefore well-positioned to move forward from these less than satisfactory results,” he said.