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Van Elle boss blames Carillion for profit slump

Van Elle

Geotechnical contractor Van Elle suffered from “ripple effects continuing from Carillion’s demise”, its new chief executive said he published half year results.

The firm’s results for the six months to 31 October last year showed pretax profits down 54% to £2.4M as turnover fell 18% to £42.9M.

Van Elle’s new chief executive Mark Cutler told New Civil Engineer that Carillion’s collapse was largely to blame for the profit slump.

“That was a relatively subdued half for us as a group compared to recent experiences, dominated mainly by Q1 being particularly slow,” he said.

“In Q1 we saw the ripple effects continuing of Carillion’s demise. In our prior year we had taken bad debt losses against Carillion already, but the confidence in the market place and the effect on the contracting market and our sector was still absolutely prevalent in Q1.”

He added: ”We typically deliver 1,000 projects a year. There is no one in our sector that has that scale of workload and diversity of services. We are doing far more projects than our major rivals, who tend to do a lesser number but bigger jobs. They are perhaps more infrastructure-focused.

”We are quite diversified across other sectors, including housing. We were not focused on and achieving the sort of workload we needed.”

A Van Elle spokesperson later admitted that its full-year results would be “significantly below previous expectations”.

Van Elle said that its gross margin performance had been impacted by “some areas of poor operational performance in Q3 in general piling”.

Cutler, who joined from Balfour Beatty in August 2018, said: “General piling was impacted by projects that simply were not executed to the standards that we normally expect.

“From time to time contractors lost their hardwired processes and focus on back to basics operational and commercial focus.”

The half-year figures included a £300,000 restructuring charge.

Cutler said: “Since joining the business in August I have been taking action to refine the group’s commercial approach, streamline operations, strengthen the leadership team and refocus on our key customers. This is already creating a strong platform from which to pursue our growth strategy.”

Van Elle’s half year results also show that its revenue decreased by 18.4% due to a slowdown in the housebuilding and infrastructure sectors.

Operating profits over the period also fell 47.4% to £3M.

Cutler added: “There is work to do at the front end in the marketing and the bidding for work. There is more to be done than I had expected in terms of operational performance.”

He added: “We have rationalised the number of divisions in the business, down from eight to five. That reduced cost, reduced interfaces, simplified the business and concentrated on divisional structures that are more common sense in terms of the way that we explain ourselves to our customers and support the internal collaboration improvements that we are looking for.”

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