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Profit slumps at Willmott Dixon in wake of supply chain failures

Pre-tax revenue plummeted at Willmott Dixon final yr, with the agency blaming troublesome buying and selling circumstances and spiralling provide chain insolvencies for a “disappointing” set of annual outcomes.

Revenue earlier than tax, amortisation of goodwill and distinctive objects was £10.9m, down from £41.2m the yr earlier than, in accordance with the group’s accounts for the yr ending 31 December 2022.

And taking into consideration goodwill amortisation of £2.4m and a £7.5m provision for what the agency described as “anticipated however not but just about sure” insurance coverage recoveries, pre-tax revenue slumped farther from £28m in 2021 to £1m.

Willmott Dixon is taking legal action against subcontractors and consultants over faulty cladding on a residential constructing in Woolwich following an settlement with house owners Tesco to hold out remedial work.

Nevertheless, in audited accounts filed with Firms Home, the agency said that turnover had held up higher than may need been anticipated given difficult current circumstances, rising by 3.9 per cent to succeed in £1.15bn.

The speedy and sustained surge in inflation had a selected impression on outcomes, it mentioned, with greater than £100m of potential new orders postponed or cancelled in the course of the latter a part of final yr.

Group chairman Colin Enticknap mentioned: “Clients discovered they may not meet their very own viability targets, and on initiatives already secured at pre-inflation costs, our provide chain companions actually struggled to accommodate – and in some instances survive – the sheer scale of unpredicted value will increase they confronted.

“The place provide chain failures did happen, progress on websites was severely hampered and sourcing replacements got here at a considerable value premium.”

Willmott Dixon’s order e-book remained “surprisingly resilient” regardless of postponed and cancelled orders, Enticknap added.

A current reorganisation that noticed two of its development divisions merge right into a renamed South operation, the mixing of enterprise assist providers and a recruitment freeze in most areas had been anticipated to translate right into a £20m discount in annualised prices, bettering resilience till market circumstances picked up, he added.

Having taken steps to stability prices towards the decrease finish of turnover expectations for 2024, the agency was well-positioned to ship improved efficiency over the yr forward, Enticknap mentioned.