Engineering services contractor Renew has said its profit is set to take a hit due to delays in Network Rail projects.
A trading update from Renew Holdings this morning warned that its adjusted operating profit for the year to 30 September 2025 will be lower than initially expected, although still above last year’s level of £63.6m.
It said: “Trading within the rail sector has been impacted by the slow start to the Control Period (CP7), which commenced in April 2024.
“This lower-than-expected level of activity has continued in recent weeks[…]. Consequently, trading in the group’s rail sector is now behind management expectations.”
The statement added that there had been “delay and deferment” on its rail activities and uncertainty over a number of renewals programmes.
“Having operated in this sector through previous control period transitions, we believe that this situation will normalise as we move through the cycle.
“Our clients remain committed to record levels of expenditure in renewing and maintaining the national rail network to satisfy their regulatory obligations,” it said.
CN’s sister title New Civil Engineer reported in September about concerns at Network Rail that its finances had deteriorated and route directors had been warned that tight financial management was required in the first year of CP7.
Factors including “adverse weather, continuing issues with Wales & Western and higher overall levels of asset failures” were blamed for its financial underperformance.
In November, Renew revealed a “record financial performance” for the year to 30 September 2024, posting £1.1bn in turnover and a pre-tax profit of £60.2m.
Renew was ranked 25th in the CN100 2024 table of top contractors based on its 2022/23 accounts, with pre-tax profit of £62.8m from turnover of £921.6m.
This morning’s trading update said the firm’s performance in the water sector was ahead of expectation, and recent successes included landing slots on two new five-year frameworks for Affinity Water.
It said its order book stood at a “record level” of £905m as of 31 December 2024.
A Network Rail spokesperson said: “The start of CP7 has seen higher activity and spending compared to the beginning of CP6, though not yet at CP6’s peak levels. We’ve been transparent about our 2019-24 spending profile and its impact on our supply chain.
“As an industry, we have significant improvements to make in train performance, which we are balancing along with enhancement and renewal works. We remain committed to working closely with our suppliers in CP7 and maintaining as much transparency as possible going forward.”
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Ian Weinfass