Durham-based Esh Holdings achieved higher group turnover but slightly lower pre-tax profit in 2022, according to its latest annual report.
The contractor posted group revenue of £260.9m for the year ending 31 December, marking a 2.3 per cent year-on-year increase. Profit before tax fell from £3m to £2m.
Esh broadened its profit margin but it remained thin at 1.14 per cent, compared with 0.78 per cent the previous year.
The group employed an average of 715 staff in 2022, slightly lower than the previous year’s figure of 765. Its balance sheet stood at £33.4m, of which £12.4m was in net cash, with a further £66m available on an undrawn credit line.
In his strategic overview accompanying the annual report, director Andy Radcliffe described the difficulties Esh faced in executing civil engineering, housebuilding and general construction contracts last year.
He admitted that a strategic decision taken before the Covid pandemic to target long-term contracts “was proven to be misplaced in the context of a global pandemic and its inevitable aftereffects”. However, Esh took steps to insulate itself from the worst effects, such as stopping fixed-price bidding in 2022.
However, pressures on the supply chain and rising energy prices, mixed with labour shortages and what Radcliffe called “the highest level of construction material cost inflation in a generation”, led to delays in long-term jobs. This was particularly apparent in Esh’s commercial construction and social housing businesses.
As a result, Esh adopted a different approach to commercial projects, with its focus shifting away from multi-room residential and mixed-use schemes to local authority-led projects, mainly in the police, healthcare and education sectors (pictured).
The group ended 2022 with a strong pipeline of local authority projects in infrastructure, public realm and general construction. Its position on local authority frameworks ensured “a healthy level of participation in this segment”, Radcliffe added.
For the 2023 financial year, Radcliffe said he expected a slow first half for housebuilding but “significant volume and margin expansion” in the second half of the year as inflation moderates and availability issues with labour and material ease.
Successes this year include Esh’s biggest-ever deal: a £56m contract to build affordable homes in Middlesbrough.
Radcliffe concluded: “With an order book maintained at near-record levels, which includes 100 per cent of our turnover forecast for 2023 and 65 per cent of our turnover forecast for 2024 secured, the group is looking forward with cautious optimism.”