Wates takes big step towards £2bn turnover target

Wates has posted big leaps in profit and revenue in a snapshot of its 2016 results revealed today.

The contractor said its pre-tax profit was up 17.1% to £35.5m, up from £30.3m, while turnover grew 20.4% to £1.53bn, up from £1.27bn.

Andrew Davies, chief executive at Wates, told Building the results showed the firm “can grow in a disciplined way” towards its ambition of becoming a £2bn-turnover firm - although he again declined to put a timeframe on hitting the target.

He also joined the growing band of contractor chief executives to argue builders should be making better margins, after bosses including Balfour’s Leo Quinn set margin growth targets this results season.

Davies said the firm’s contracting margins were “around 2%”, adding: “I’d like to push margins up. We just want consistency…

“It will be a long haul and you have got to be realistic about what you can achieve… Yes, it’s thin margins for what we do and the risk we take.”

The group’s overall pre-tax profit margin - including its residential division - is at 2.3%.

Commenting on Brexit uncertainty, Davies said: “The uncertainty is still there. People are hesitating slightly to make decisions and people are still more cautious. [And there is a] degree of uncertainty with the existing workforces [from the EU].”

Wates was boosted during the year by the integration of the businesses it acquired from Shepherd Group the year before, including its M&E division and a number of construction projects.

The company also increased its housing operations, with 2,500 homes either completed or under construction in 2016.

The firm’s cash position also improved, with cash flow from operations up 22.5% to £71.7m, while group cash was up 50.3% to £191.6m. Its order book stood at £3.6bn.

Wates’ full accounts will be published at Companies House in the coming days.

James Wates, chairman of the Wates group, said: “The company’s strong financial results are a testament to the quality and commitment of our people, the strength of our relationships with clients and partners, and our robust financial management.”