Shepherd Construction back in the black with £4m profit

Shepherd Construction has returned to profit with record figures after two of testing years in the red, the annual accounts from parent company Shepherd Group reveal.

The construction arm of the contractor posted record profit of £4m for the year to 30 June 2011.

Last year, Shepherd Construction made a £2.1m loss and in the year to 30 June 2009 it posted a loss of £10.5m.

This year’s profit came despite what the group called “strong competitive pressure on margins” and the fact that Shepherd Construction and building services division SES underwent a restructuring process, which cost the company £2.8m.

Parent company Shepherd Group nearly doubled its annual pre-tax profit this year, posting a profit of £31.5m for the year, up from £16m last year. Its turnover also increased from £526.7m last year to £611m.

Group chairman Alan Fletcher said: “The quality of the management teams, the excellence of the product offerings, the swift action taken to improve efficiencies and
sound cash management have combined to drive improved profit performance and build the group’s financial strength.”

The group’s strongest component was its industrial division which had an operating profit of £26.6m. Within this its Portakabin Hire business continued to be the primary source of profit.

The new homes branch of the group, which includes Shepherd Homes, Homeseeker Park and Leisure Homes, recorded losses which the group blamed on poor market conditions.

Shepherd added that higher turnover, reduced losses and improvements to the specification of its houses put it in a good place to capitalise when the market returns to normal.

“While the continuing general economic uncertainty points to a need for caution in the short to medium term, the considerable improvement in the group’s profitability and its sound financial performance give confidence in the underlying strength and future potential of the business,” Fletcher said.

Following the increase in profit Shepherd plans to pay dividends of £8 per share, up from £7.59 last year.