McLaren edged back to profit in its last full year, with group turnover jumping 39 per cent as it recovered from the impact of COVID-19.
The London-headquartered contractor reported a pre-tax profit of £2.04m in the year to July 2022, compared with a pre-tax loss the previous year of £12.4m.
Turnover at the privately owned group increased to £751.7m, up from £541m the prior year.
However, alongside the higher turnover was a sharp increase in costs. The group’s cost of sales in the year rose 36 per cent to £720.2m. Administrative expenses also increased, up 14 per cent to £30.2m.
The company said pandemic-related resource and supply-chain issues had continued to mean “fulfilment challenges hinder site efficiency levels and contribute to steadily increasing market inflation risk”.
However, it said “stability” had returned after “challenging market conditions”.
Speaking to Construction News, McLaren chairman Kevin Taylor said that the increase in turnover was partly a result of expansion into new sectors, highlighting recladding jobs such as the Chalcots Estate in Camden, north London, and data centres.
“We are not chasing turnover but we do see opportunities in new markets,” he said.
Paul Heather, McLaren’s group managing director of construction (UK) also pointed to its inclusion on a number of public-sector frameworks, which has led to a number of jobs in education and health.
He said: “We need to be diverse because the private/public-sector workload ebbs and flows depending on the economic climate. We want to be a sustainable business that can trade through, irrespective of what’s happening in the economy. So to do that, we need to be able to go into different sectors.”
However, the minimal margin of 0.3 per cent made during the year was partly put down to the upfront costs involved in entering new sectors.
Heather said: “Some of it comes from retraining people, or getting new people with different skills on board. In addition, your strike rate on tenders isn’t going to be as good because you’ve got to prove yourself to clients. It’s a long game. It takes time to carve out a new niche.”
McLaren has secured a number of high-profile jobs in the last 18 months. In addition to taking over from Wates to remediate the Chalcots Estate, it also replaced Sir Robert McAlpine on the £200m expansion of London’s ExCel Centre.
In its UK business, turnover rose 51 per cent to £692.4m, helped by repeat business from developers Quintain, Argent and Muse, the group said.
McLaren added it was exploring “substantial opportunities” to work on recladding and estate-regeneration jobs, which it sees as an “area of growth”.
The post-Grenfell building-safety crisis has seen a wave of work in this area, which is set to continue. The G15 group of London’s biggest housing associations has estimated its members spend on building safety will hit £3.6bn by 2036.
Meanwhile, McLaren said it expected to see more work in the education and healthcare sectors, as well as data centres, residential, industrial and logistics, and commercial.
Looking ahead, the firm said it expected group turnover in its current financial year to reach £878.5m.
In accounts published at Companies House, it said its outlook “remains stable” with the business “strongly positioned to grow”.
Heather said: “Our 2022 results show a company with the right strategies and investment in place. We were fully equipped for new sectors and technical challenges, confidently managing supply-chain risks and ready to take advantage of opportunities in the market.”
Cash at the bank at year-end was £69.2m.
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James Wilmore