Economic ‘uncertainty’ pushes down profit at scaffolding firm

A major scaffolding firm has blamed cost inflation, economic uncertainty and a reduction in new starts for its dipping profit.

Uxbridge-based PHD Modular Access Services said it was “satisfied with the results particularly in light of the fiscal and diminished macro environment” that the construction industry had faced.

It posted a pre-tax profit of £987,000 in the year to 30 August 2024, down from £1.5m the previous year. Turnover, though, grew to £23.3m from £22.6m.

The firm’s margin narrowed from 6.8 per cent to 4.2 per cent.

PHD – the 10^th biggest scaffolding specialist in the UK in last year’s CN Specialists Index – said the wider construction market had now “stabilised somewhat from cost inflation and reduced new starts”, wage and material inflation, and tightened market conditions cause by the heightened cost of borrowing.

It said it improved its operating position by “proactively engaging” with the supply chain and client base, adding that it had benefited from a strong balance sheet and having “substantial plant in hand”.

To deal with the uncertainty in the economic climate, the firm focused on developing its current relationships with “top developers and contractors” in the UK and Europe, it said.

“We also worked collaboratively with our key suppliers and supply chain to minimise any effect of the current climate,” it added.

The firm works mainly in the heritage, industrial, defence, infrastructure and commercial sectors.

It increased its cash at hand almost ninefold, rising from £17,098 to to £129,290 by the end of its financial year.

No dividends were paid out but PHD owed £432,901 in bank overdrafts and £84,682 in bank loans repayable within 12 months. The firm also held £141,150 in bank loans repayable after more than one year.

In the latest financial year, it reduced its staff numbers to 127 from 132, with its spend on wages decreasing from £6.7m to £6.3m.

In its accounts, PHD pointed to its plan to “actively expand” its operations in the UK infrastructure sector, alongside its continuing aim to expand its overseas work in Spain, Germany, Ireland and Denmark.

Like the rest of the construction sector, scaffolding firms are struggling to recruit enough workers to fill its vacancies. Earlier this year, National Access & Scaffolding Confederation chief executive Clive Dickin called on the government to ease immigration rules to plug the gaps in the workforce.

In April, he told Construction News the government will struggle to meet its housing and infrastructure targets without those changes.