O’Shea blames high interest rates for construction loss

CJ O’Shea made a loss on its construction work in its latest financial year.

Newly released accounts for the north London-headquartered contractor show that it made a pre-tax loss of £1.6m in the year to 31 March 2024. In the prior 12 months it made a £3m pre-tax profit on its building work.

The loss came despite turnover for the business growing to £133.6m, from £124m previously.

In a statement included in the accounts, O’Shea executive chairman Rory O’Connor said its performance was due to “unexpected increase in costs incurred” on completion of some projects and “the negative impact on the property market from the high interest rate”.

He said the directors believe the company will turn its results around, though cautioned this may not happen in the current financial year.

“The current uncertainty in the UK economy and the resolution of labour shortages and material costs are likely to impact the performance of the business in the current year ending 31 March 2025.

He added that “the continuous high interest rate” also hit group performance.

“However, the directors believe that the company’s good order book from well-established customers, resilience and its strong balance sheet will enable it to maintain its position within the market it operates in,” O’Connor said.

In 2022, pre-tax profit at the construction arm had reached £19.7m.

The wider CJ O’Shea Group, which also carries out development work and runs a plant-hire business, remained profitable in the 12 months to 31 March 2024.

Results for the group, also just released, show its pre-tax profit slipped to £7.9m, down from £24m in 2023.

Its share of profit from development joint ventures was down from £18.6m to £4.5m, achieving a similar level of profit on the activity as it made in 2022.

Group-wide revenue rose to £144.2m from £133.5m, while plant-hire revenue fell from £9.3m to £8m.

In the group accounts, O’Connor said: “The directors consider the results to be satisfactory against an environment of rising labour and material costs and uncertain political situation in the UK and worldwide.”