Henry Boot saw a fall in contracting work in the first six months of its current financial year, despite overall group revenue increasing.
The west London-headquartered developer and builder turned over £179.8m in the six months to June 2023, a 24.5 per cent increase on the equivalent period a year earlier, driven by land disposals and housing completions.
Its pre-tax profit stood at £25m after six months of trading, down from £38.8m the year before. The profit was helped by the “resilient performance” of residential land sales and industrial development activity, the group said.
But its construction segment turned over £56.2m, a decrease on the £66.5m reported for the same period last year, due to a “challenging market”. It achieved an operating profit of £4.4m, compared with £6.3m a year earlier. The company does not report on statutory pre-tax profit figures in its interim results.
The group said Henry Boot Construction (HBC) “remains focused on delivering its current projects with 72 per cent of its 2023 target order book secured following delays in bringing activity to site, as customers proceed cautiously”.
The results statement added: “HBC is trading below management’s expectations, having experienced difficult operating conditions in line with the UK construction market.
“The slowdown in UK construction has resulted in HBC securing only 72 per cent of its turnover for 2023 (94 per cent of its costs have fixed-price orders placed or contractual inflation clauses), and has experienced several delays on preconstruction-services agreements (PCSAs).
“However, there is a healthy pipeline of opportunities that HBC is actively pursuing, with a target of £85m [for] PCSAs across urban development and residential opportunities.”
Despite suffering delays, subcontractor and material availability issues, Kangaroo Works, a £47m build-to-rent scheme, completed in August 2023. Meanwhile, the Heart of the City, Block H – a £42m urban development scheme in Sheffield – was due to complete in phases between August and October 2023. The Cocoa Works, a £47m residential development in York, remains on time and within budget.
Henry Boot chief executive Tim Roberts said: “The first half of the year has seen our markets slow, as interest rates have continued to rise but, as these results show, our focus on prime strategic sites, high-quality development and premium homes has provided us with a degree of resilience.
“Whilst uncertainty in our markets has increased, we believe we have enough momentum to carry us through the year, although the outlook for 2024 for the time being is not so clear. However, we have conviction in our three markets, which are driven by structural trends, and I am pleased to report that we remain on track to hit our strategic growth and return targets over the medium term.”