A 74-year-old mechanical and electrical specialist is in administration after years of financial struggles, impacting the construction sector.
- HBS Southern, once thriving, faced significant challenges with declining demand and increased material costs.
- Losses persisted for two years, with turnover dropping from £16.4m to £15.5m.
- Hybrid working and slow decision-making by developers further impeded business operations.
- Efforts to diversify were made but were insufficient to offset sector challenges.
A 74-year-old mechanical and electrical (M&E) specialist, HBS Southern, has appointed administrators following years of financial difficulties. Despite its storied history, the family-run business struggled to maintain profitability in recent times, grappling with declining demand and escalating costs.
Founded in 1950, HBS Southern evolved from a local plumbing and heating contractor to a respected M&E specialist, collaborating with major housebuilders like Barratt, Berkeley, and Taylor Wimpey. Yet, the firm faced mounting losses over the past two years, with its pre-tax loss increasing from £900,000 to £1.1 million.
The firm’s turnover also witnessed a downturn, decreasing from £16.4 million to £15.5 million. Charles Bull, involved in the company’s management, attributed these challenges to several factors, including an ‘exceptional’ surge in material prices, which offset the strong pipeline anticipated post-pandemic.
Competitive bidding pressures further strained HBS Southern’s resources, as competitors with lower overheads undercut its bids, appealing to developers seeking to optimize reduced profits. Additionally, hybrid working patterns, a post-Covid norm, were cited as obstacles stifling efficient communication, further delaying project progression.
Management foresaw stagnation or a slight decline in turnover due to unpredictable sales forecasts in the housing market. In an attempt to mitigate revenue drop from the housing sector, diversification into commercial projects was explored, yet it proved insufficient given the sector’s overarching challenges.
By the end of the financial year, it was projected that the company would face a net cash outflow of approximately £800,000. The future of subsidiaries like HBS New Energies, recently rebranded as UPOWA and acquired by Brickability in 2021, remains to be seen.
Efforts to contact RSM UK, the appointed administrators, have so far been met with no response, and attempts to reach HBS Southern directly were similarly unsuccessful.
The administration of HBS Southern underscores the difficulties faced by many in the M&E sector amidst economic fluctuations.
