Pressure on margins in the sector led to structural steelwork contractor Billington Holdings making a loss in the first half of the year, despite workload holding up.
Its interim results for the six months ended 30 June 2011 show revenue up 7% to £22.8m (2010: £21.3m). Billington made a loss of £600,000 on continuing operations, compared to a £1.1m profit in the first half of 2010. It made an overall loss of £400,000, compared to £800,000 profit last year.
Although the number of business failures in the steelwork contracting sector has so far been relatively small, the directors believe that with recently announced further increases in steel prices, coupled with a harsh stance being taken by credit insurers, “there will inevitably be further casualties”. Despite making a loss, Billington maintains a strong cash position and evaluates any opportunities that arise, as evidence by its March acquisition of Peter Marshall out of administration for £98,000.
Chief executive Steve Fareham, of Billington Holdings said: "Throughout the first six months of 2011 the markets have remained challenging, but I am happy to say that we have managed to grow revenues, albeit at tight margins. We have made a number of decisions, which we believe will position us well for the long term growth of the business, including the formation of BS2 [joint venture with Bourne Steel] and the acquisition of Peter Marshall Steel Stairs Ltd. The formation of BS2 was well received by the industry and will enable us to bid for bigger projects, whilst the acquisition of Peter Marshall was timely and complemented our own business.
"We are under no illusions, even though we expect margin pressures to ease in 2012; we realise that the construction market recovery will be a slow one. We remain cautious going forward, whilst positioning ourselves for growth. We have a strong balance sheet, the industry knowledge and relationships, to provide us with a degree of confidence in the current market conditions and look to 2012 with cautious optimism."
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