A new leader, London-based Stanmore, leads the 2023 envelope contractors index, signalling a shift since 2018.
- Stanmore’s revenue soared from £96.1m to £142.9m, overtaking Permasteelisa, despite its own 12% revenue increase.
- The top 10 contractors’ total turnover reached £974.3m, marking a 28% rise, though median margins fell to -1.2%.
- McMullen Facades faced the largest loss of £21.8m, yet doubled its revenue to £127.7m, citing contract issues.
- CA Group emerged as the most profitable, earning £7m pre-tax, aided by logistics demand and non-combustible materials.
The 2023 envelope contractors index introduces a new leader, Stanmore, a London-based company that has climbed to the top for the first time since 2018. Despite Permasteelisa’s robust 12% revenue rise, Stanmore’s surge from £96.1m to £142.9m has secured its lead. Stanmore attributes its growth to the easing of Covid restrictions, economic recovery, and a high demand for new housing, though its revenue remains below the £153.2m peak achieved in the year ending March 2020.
The overall financial health of the top 10 envelope contractors appears robust with an aggregate turnover reaching £974.3m, up by 28% compared to the previous year’s index. However, this growth contrasts sharply with the decline in median pre-tax margins, which have deteriorated to -1.2%. Five of the contractors reported losses by the end of their financial years, amassing a combined pre-tax deficit of £21.1m, a decline from the £9.3m loss reported in the previous year.
McMullen Facades faced significant financial challenges, recording the largest loss among the 2023 index participants with a £21.8m pre-tax deficit. Despite nearly doubling its turnover to £127.7m, the company blames “poor-performing contracts” for its financial woes, although it is implementing measures to stabilise its supply chain and enhance supplier relationships.
In contrast, CA Group, based in Durham, demonstrated strong profitability with a £7m pre-tax income, marking it as the most profitable in the top 10. The company experienced a turnover increase of £29.8m, reaching £107.5m, marking its second consecutive year of positive growth following a downturn during the pandemic. Business development manager Jon Dore highlights a surge in demand for logistics space and non-combustible materials, alongside a focus on fire safety, as key drivers of their success.
Nevertheless, Jon Dore acknowledges a changing economic landscape, citing challenges such as interest rate increases, inflation, and planning delays that are now impeding construction progress. He reflects on the past year’s resource constraints due to overwhelming demand, which forced CA Group to decline some projects, a scenario he initially deemed favourable. However, he notes a market slowdown this year as capacity issues have abated.
Dore further comments on the persistent impact of professional indemnity insurance costs on the industry, although CA Group is less affected due to its limited design engagement. He voices concern over the financial stability of contractors in the supply chain, emphasising the risk posed by recent insolvencies, including that of Buckingham Group, which may have lasting repercussions on the market.
The 2023 envelope contractors index highlights both the financial growth and challenges faced by leading firms in a complex economic environment.
