Arup profits drop by third as staff costs jump

Arup has seen its annual profits drop by a third despite reporting a return to revenue growth. 

The consultant reported pre-tax profit of £36.7m in the year to the end of March 2022, compared to £54m the previous year. 

It came as “charges from sub-consultants” and other project expenses rose a quarter to £425.5m, accounts filed at Companies House revealed. These costs relate to the firm’s subsidiary Ove Arup & Partners, whose staff are not directly employed by Arup. 

In addition, the amount Arup paid out on its profit-share scheme to its workforce jumped 46 per cent to £143.1m. Since 1979, the firm has been employee-owned with all of its 16,000-strong global workforce having a stake. 

Costs from redundancies fell sharply in the latest year, the accounts showed. In its 2021 financial year Arup recorded £27.9m of “headcount reduction costs”, but this dropped to £1m in the latest year. 

Turnover rose 10 per cent to £1.9bn. In its previous year Arup’s revenue had dropped 5 per cent to £1.7bn as it felt the impact of the pandemic. 

The UK is Arup’s largest market, where in its latest year it recorded a 17 per cent rise in turnover to £710.4m. The next highest was the Americas where its revenue increased to £363.3m. 

Arup chair Alan Belfield branded the results a “strong financial performance” despite “lengthy” lockdowns in some of the regions where it operates. 

On the war in Ukraine, Belfield said the financial implications for Arup had been “modest”. In Russia, the group withdrew from a “small number of projects” but did not have any offices there, he added. 

However looking ahead, the company warned about the current conditions. “The escalation of geopolitical tensions towards the end of the year, and the Ukraine conflict in particular, together with rising energy prices, interest rates and inflation are expected to continue contributing to an unsettled economic climate and market conditions,” it added.