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Second quarter loss drags on NMCN

6 Aug 20 The half-year results of construction contractor NMCN demonstrate the extent to which it has been a half of two quarters for the UK construction industry.

Chief executive John Homer
Chief executive John Homer

In the first three months of the 2020 NMCN’s revenue increased by 3.7% to £97.9m and pre-tax profit was up by 5.9% to £1.8m.

Then came lockdown. The second quarter brought site shut-downs, productivity constraints, changes in working methods, and prolongation of contracts. In addition to operational completion challenges on a major infrastructure scheme, resulted in a pre-tax loss for the quarter of £1.0m (2019 Q2: £1.8m profit)

Overall, for the six months ended 30th June 2020 half-year revenue decreased by 1.3% compared with 2019, from £184.0m last time to £181.6m. Profit before tax decreased to £800,000 (2019 H1: £3.5m).

The order book currently stands at 93% of expected revenues for the year with all business units and sites fully operational, working at Covid-19 compliant production capacity.  The impact on margins has been significant, the company said, and would continue to be so for the remainder of this year.

Chief executive John Homer said: "The first half of 2020 comprised two very different quarterly trading periods. We started the year well, with the financial results reflecting an encouraging order book and the benefit of a number of our initiatives. In the second quarter we faced the immediate challenges of Covid-19 with the suspension of projects and the disruptive impact of new operating requirements and these were compounded by some other operational issues. In overall terms, I am delighted to be reporting a profitable result for the period which we believe further demonstrates the value of our business model and dedication and capabilities of our teams.”

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NMCN’s Built Environment segment saw revenue growth of 19% in the period from £51.9m in 2019 H1 to £61.8m this time, but made a small operating loss.

The Telecoms business unit made an operating profit of £700k, up from £500k in the same period last year.

The newly established Power & Industrial business unit was unable to wash its face, with delays to the start of projects resulting in insufficient returns to cover fixed overheads. This is expected to change in the second half.

The Highways business unit had ‘a disappointing first half-year, largely due to operational issues’ but prospects for the remainder of the year are ‘more encouraging’. Work is due to start on a £28m junction improvement job on the M621 later in the year and NMCN has preferred bidder status on some local authority road schemes starting this year.

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