Engineering specialist NG Bailey has returned to the red in its last financial year.
The firm posted a £25m pre-tax loss for the year ending 3 March 2023, down from a £3m pre-tax profit the prior year. The group had previously made a £4.4m pre-tax loss in 2021.
The majority of losses came from the engineering division, where the firm lost money on multiple major fixed-price contracts.
NG Bailey chief executive David Hurcomb said: “Costs have risen substantially, above what we could have ever anticipated.”
Hurcomb said that fixed-price engineering contracts had been particularly vulnerable to inflation, as contracts were signed months or years before work started on site. “We have taken a big hit, but that is behind us,” he said.
Profits were further stymied by rising energy prices and interest rates, he added.
NG Bailey also took a big hit when Britishvolt collapsed in January 2023. The firm lost £6.8m of equity invested in the vehicle-battery start-up’s planned gigafactory. Despite the failure of Britishvolt, Hurcomb remained optimistic about the gigafactory pipeline.
The engineering specialist showed signs of health in other respects: its annual turnover increased by £32m to £532m, and the firm retained net assets of £121m.
NG Bailey said its services divisions “achieved record levels of profitability” with “strong cash generation”, and it now accounts for almost half of group turnover.
The firm’s order book increased by £100m to £1.3b, largely buoyed by long-term major infrastructure projects. Hurcomb said the company was “positioned for growth in the decarbonisation sector”.