McAlpine doubles civil and infrastructure work as Covid bill causes £ 27m loss, News
Sir Robert McAlpine plans to more than double its civil engineering and infrastructure business in the coming years to capitalize on the government’s focus on construction and the leveling agenda.
Best known as a building contractor, the company has completed some of the most iconic construction projects over the past 15 years including Arsenal’s Emirates Stadium, the main stadium for the 2012 Olympics and the redevelopment of the Broadgate complex in the city of London.
But there is an attempt to do a lot more civil and infrastructure work over the next five years and its managing director Paul Hamer told Building, “There are some very big established players [in civils] But the market is big enough to accommodate McAlpine with some of our skills. “
Hamer, who spoke when the company said the cost of the pandemic resulted in a loss of £ 26.8m in pre-tax revenue, which fell 19% to £ 819.5m in the year ended October 2020, added, that the government was focusing on construction to lead the country’s economic recovery from the Covid-19 pandemic had helped the company decide to seek more jobs outside of its traditional building core.
“I am very pleased with how the government has made construction a priority,” he said. “In the last recession, construction was the first entry and the last exit. The focus on construction was long overdue. “
The company’s current civil and infrastructure work turnover is between £ 120 million and £ 150 million, which is about 18% of its business. However, Hamer said he wanted those sales to ultimately be between £ 300 million and £ 400 million, representing more than 30% of sales.
“It’s pretty clear that we would see [government] Investment in this [civils and infrastructure] Sector and [for us] For a 152 year old company, being mostly buildings and mostly residential customers isn’t a sustainable place. The infrastructure is a public sector, long-term and cheaper in terms of contract terms. “
McAlpine’s main customers in this sector are HS2, where the company is part of the Align joint venture which is carrying out a £ 1.6 billion tunnel and intersection contract for the railroad in the Chilterns and Highways England. His duties include working on junction 19 of the M6 and upgrading parts of the M56.
The company is keen to plan more work from both, with Hamer confirming it is likely to offer the plan to build the HS2 swap station in Solihull, valued at around £ 200m.
Hamer said he expects between a quarter and a third of the company’s profits from the civil and infrastructure markets, with the company also considering new clients like Network Rail and other nuclear works.
Hamer spent five years with the British Nuclear Group, where he was responsible for decommissioning the property’s nuclear reactor fleet. He said the company’s return to nuclear facilities, which it specialized in a few decades ago, would focus on the civilian side of the systems.
But Hamer said McAlpine is still focused on the core building and commercial work, adding that it is speaking with British Land about its plans at 1 Broadgate and 2-3 Finsbury Avenue in the city totaling £ 600million while it remains one of two bidders for Derwent’s office-run mixed-use program on Baker Street valued at around £ 120 million.
“We have a very strong pipeline of commercial opportunities. The UK is still seen as a top investment destination, ”he added.
He said the office market continues to be strong, adding, “When the pandemic broke out there was a thought that people would not be returning to work. We didn’t approve of it and it’s not what we see.
“Developers want an adaptable, flexible footprint and a net zero. You want future-proof buildings and a big element of the market is renovation [to do that]. ”
Hamer said the company, which has 65 locations in the UK, created a £ 23 million bill for Covid last year, including the money it spent adjusting facilities to new operating procedures as well as the extra Cost of reduced productivity and tapping. about the impact of jobs taking longer than planned, with the need to pick up the delays tab.
The company claimed £ 7.3m from the government’s Coronavirus Job Retention Scheme after taking more than 1,000 people off at the height of the initial lockdown, representing 52% of its workforce. According to Hamer, less than 1% of employees stay on the initiative, especially those who have been forced to provide protection for health reasons.
The year-end cash position was £ 96.7m (versus £ 94m). The company added that it is expected to return to profits this year, with sales returning to pre-pandemic levels.