Civils specialist sees profit tumble due to problem job

Hochtief UK’s profit fell by 85 per cent in 2021 due to problems with an unnamed job.

The infrastructure specialist made a profit of £681,000 in 2021, down from £4.6m the previous year, according to accounts filed at Companies House. The decrease was despite the group’s turnover jumping from £82.3m to £99.3m.

Hochtief UK is the British subsidiary of Germany’s largest construction company, which earned £22bn worldwide in 2021. Hochtief UK focuses on rail and highways improvement work, as well as cable tunnelling for the energy sector.

The company said its increased revenue was “mainly due to high output on a tunnelling project”, while the decrease in profit was down to “the deterioration of result on one project”.

Hochtief UK said it saved £1m through a reduction in bid costs and lower overheads in 2021, and that its staff headcount fell over the course of the year from 153 to 142.

In the financial report, Hochtief UK also revealed it is exposed to changes in the price of commodities such as steel, but said that it is not financially expedient to hedge against price rises given the company’s size, stating that “the costs of managing exposure to commodity-price risk exceed any potential benefits”.

However, the company said it was protected against inflationary risk by “escalation clauses in its contracts”, adding that it was expected “to generate profits” in 2022 and 2023.