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Wed July 08 2020

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Willmott Dixon sees profits soften and warns disruption will continue

5 Jun National contractor Willmott Dixon saw a slight dip in its financial performance in 2019 but still maintained a pre-tax profit margin of 2.5%.

Chief executive Rick Willmott
Chief executive Rick Willmott

However, chief executive Rick Willmott knows that Covid-19 will make its 2020 numbers all rather different, regardless of how well his company rises to the challenges.

Willmott Dixon’s turnover for the year to 31st December 2019 was down 6% to £1.246bn (2018: £1.323bn). Pre-Covid, 2019 was a year that Brexit uncertainty was widely blamed for discouraging investment and suppressing demand for commercial construction.

Willmott Dixon Holdings made a pre-tax profit of £29.2m for the year (2018: £35.5m), which includes a provision of £6.2m for the replacement of non-compliant cladding.

The profit before tax margin dipped from 2.8% in 2018 to 2.5% in 2019.

Stripping out all non-recurring provisions reveals modestly improved EBITDA, up 2.6% to £39.6m (2018: £38.6m).

The accounts show £93.1m cash at bank at the year-end (2018: £90.5m) and bank facilities remain unused but committed until 2021.

While turnover from construction was down, at £1.097bn (2018: £1.198bn), Willmott Dixon’s Interiors business grew by nearly a fifth, contributing £149m turnover (2018: £125m).

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Chief executive Rick Willmott said: “Our performance in 2019 has provided a good platform for our company to continue delivering projects for customers during the challenges created by Covid-19.”

Willmott Dixon has been swift to adopt new working procedures on its sites and kept all but three open throughout the lockdown – the only closures were those demanded by clients and were kept brief.

“It’s been a phenomenal team effort from our people as we have adjusted our business to maintain operations during Covid-19, one that has required a high level of resourcefulness,” Mr Willmott said. “Our people quickly embraced the changes required to adhere to the Construction Leadership Council’s site operating procedures, with projects and processes reconfigured to provide a safe working environment for our people and supply chain partners, whose support has been brilliant over the past few months.

“Our sites have remained open throughout, using adaptations like one-way systems for circulation, GoPro technology to capture progress, motion activated voiceover systems to remind people to abide by social distancing and staggered breaks and lunch times, with clear signage for social distancing in canteens.  We now expect all sites to remain open, although Covid-19 related safety measures and availability of materials will mean that output levels will be reduced compared to before the pandemic.  While this will inevitably impact upon pre-pandemic expectations in terms of timescales and budgets, I really appreciate how supportive our customers are being on this issue.”

Looking forward, he continued: “I think we need to be realistic that output reductions linked to social distancing measures, coupled with a possible lag in the supply of some materials from overseas, will inevitably have a continued impact on project prices and programme timings in the short to medium term. We are working closely with our supply chain partners and customers to mitigate this as much as possible, while ensuring that projects starting this year now take into account the likely Covid effect.”

He concluded: “While we have a healthy forward order book that stands at over £1bn, it’s inevitable that some projects may be delayed or postponed owing to the current economic situation created by Covid-19.  

“My message to customers is that we are an industry that is very good at solving complex problems. We have shown in our response to the pandemic that we can adapt our processes to continue building safely and deliver the important infrastructure that will be a driver for future economic growth.”

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