2019 UK Construction Sector Report
The UK construction industry has experienced a further year of slowdown in sales, turnover and profits pointing to a sustained downward trend.
This is according to the latest UK Construction Sector Report from our national association MHA, a UK-wide group of accountancy and business advisory firms.
Our national Construction and Real Estate team looked at operating accounts data from 2,158 construction companies with operations across Great Britain. We then split the data into six turnover brackets, allowing you to benchmark your financial and non-financial performance against similar sized companies.Read the full report
5 key Areas
The report looks at 5 key areas of interest within the sector finishing with a regional analysis:
- Financial considerations: Although the industry is still growing, there is a clear overall trend across all groups of an industry slowdown.
- Employment and Remuneration: While there is a general upward trend in dividends, particularly for larger businesses, smaller businesses have seen flat or declining dividends being paid out.
- Business Funding: Working capital remained stable for turnovers of £5-150m year on year, with an increase in 2018/19 for turnover brackets of £150m+.
- Future Gazing: The general consensus and stated policy of the major construction companies is to improve margins. They talk optimistically of a net profit of between 2% and 5% turnover.
- Maximising Opportunities: The current year will be another challenging year for the sector. Risk management will be more important than ever, ensuring that the contracts construction companies enter into are properly costed and fully understood, with parties they can rely on and who will pay
Summary of the Year
Regional Analysis – South East
Across the three-year review period there is an overall trend of either consistent or improving profits in the sector. However, the largest of the companies seem to have had their gross profit margins noticeably eroded over the last three years.
An interesting trend emerging is an increase in short term lending and a reduction in long-term borrowing.
Brexit changes to Government policy and other economic factors will play a key part in the next year. It will be interesting to see how the data compares in 2020 and beyond.