Esh chief executive Andy Radcliffe credited the company’s “meticulously designed business model” for softening the impact of the headwinds seen in 2022.
Turnover increased by £6m to £261m (2021: £255m) Operating profit fell from £4m in 2021 to £3m last year while pre-tax profit similarly slid from £3m to £2m.
Pressures on earnings derived from fixed-price contracts that were priced pre-pandemic, before inflation, supply chain constraints and labour shortages started to bite.
However, those longer-term contracts were concluded in the first half of 2023, which, combined with a more stable inflationary environment, give the board cause for optimism about current prospects.
Andy Radcliffe said: “Our focus on targeting routes to market and key sectors that present a lower risk profile has provided a finely balanced portfolio of revenue which has served to insulate us from the extremes of the challenges experienced by the broader industry. Whilst of course we have not been immune to these challenges, many of which have led to the sad demise of a number of highly respected businesses in our regions, the strength of our core revenue model has been the key differentiator in our ability to navigate these industry-wide headwinds.”
He continued: “Our business model ensures that we can balance out the peaks and troughs of individual market segments over their respective economic cycles which offers a much more stable and predictable backdrop. Above all, targeting sectors that present near term growth opportunities, such as affordable housing, utilities and general infrastructure, while simultaneously reducing our exposure to more technically and commercially challenging sectors of the market, provides us with a level of resilience that has been the hallmark of both our maintenance of profitability during 2022, and our expectations for both turnover growth and margin expansion over the coming years.”
Esh’s forward order book across its civil engineering, affordable housing, commercial build and private housebuilding division is at record level, totalling £600m, and includes flagship schemes such as the restoration of the Tyne Bridge and the Stockton Waterfront regeneration scheme.
After adding the largest contract in the company’s history to its affordable housing portfolio earlier in 2023, a £56m new-build scheme in Middlesbrough, Esh is set to deliver more than 540 new affordable homes with Thirteen Group in the coming years.