M&J Evans, a leading groundworks contractor, reported a significant profit decline due to a slowdown in the housing market.
- The company’s turnover and pre-tax profit both experienced sharp decreases from the previous year.
- Chief executive Chris Southgate highlighted challenges including reduced demand and rising interest rates.
- Despite financial pressures, the company maintained a cash reserve and avoided bank loans.
- M&J Evans remains optimistic, with expansion plans and anticipated market recovery in the coming years.
M&J Evans, a prominent groundworks contractor based in Walsall, has faced a challenging financial year as reported in its latest accounts. The firm’s pre-tax profit plummeted to £2.2 million in 2023, a stark contrast to the £23.4 million recorded in the prior year. With a turnover decline from £405.8 million to £334.3 million, the company is navigating through a difficult period marked by a reduction in housebuilding activities.
The company attributed its shrinking margins to several factors, as articulated by chief executive Chris Southgate. He pointed out that 2023 was marked by a ‘considerable reduction’ in demand for residential groundworks. In addition to this, increased borrowing costs due to rising interest rates compounded the financial strain, resulting in operational inefficiencies and unrecovered inflation-related costs from clients, driving profit margins down from 5.8 to a mere 0.7 per cent.
Despite these challenges, M&J Evans reported its financial resilience by remaining free from bank loan debt and having a cash balance of £18.2 million at the end of 2023, slightly down from £21.2 million the previous year. The firm also saw an increase in its workforce, with headcount rising from an average of 318 staff to 423, escalating the annual wage bill from £22.3 million to £26.2 million. The company did not distribute any dividends in 2023.
Looking ahead, Southgate expressed a positive outlook, underpinned by strategic growth plans including the establishment of a new Eastern Counties region. He emphasised the firm’s commitment to growth and efficiency, with the Eastern Counties expansion set to cover a 50-mile radius from a new office in Huntingdon.
Southgate’s optimism is further fuelled by recent declines in inflation and mortgage rates, alongside a persistent housing shortage in the UK. He expects improvements in house sales and build rates during 2024, with hopes for a more sustained recovery by 2025.
M&J Evans remains hopeful for future growth and market recovery despite recent financial challenges.
