Renew Holdings ‘immune’ from credit crunch

He said the building and engineering services group operates in sectors such as social housing and land remediation that have so far escaped the downturn.

He said: “They are all robust and have good visibility. We haven’t felt it at all and the figures reflect that.”

May was speaking after the company posted a strong set of half-year figures to 31 March 2008 showing pre-tax profit grew 21% from £3.2m to £3.9m.

Turnover was up 11% from £173m to £192.9. This included a 74% contribution from the building division (£143m) and a 24% slice from its engineering business (£47.2m).

Kevin Cammack, an analyst at Kaupthing, described the results as “excellent” and praised Renew’s lack of exposure to private housing and engineering work in attractive niches such as nuclear and water.

The firm’s operating margin grew from 1.3% to 1.6% and May said the target was to increase that to 2.5% by 2010 through greater selectivity of projects.

“Margins in the engineering business are 4.6%, which is an optimum level. In the building division they will grow from 1.5% to 2% by ensuring a quality order book with long-term clients and avoiding the bear traps of problem jobs.”

The group’s building arm operates in the retail sector with clients that include Tesco, and May did not rule out the possibility of a fall in work in the future. “We’re conscious of what’s happening out there but we can only call it as we see it today.”

He also expects more companies to “muscle in” on the group’s social housing patch as the downturn continues. He said: “The fact we’ve got long-standing relationships with clients means there will always be good opportunities for us.”

The group is still targeting further acquisitions for its engineering business, particularly in the environmental sector, although May said no deal was imminent.