Morrisroe Group has reported another year of financial loss, revealing a larger-than-anticipated deficit due to unforeseen project costs. The construction firm has been grappling with legacy issues and high inflation impacting their margins significantly.
- For the second consecutive year, Morrisroe Group has reported financial losses, underscoring ongoing challenges.
- An unexpected increase in costs for a concrete frame project has severely impacted 2022’s financial outcomes.
- Material price inflation remains a critical issue, negatively affecting several business sectors within the group.
- Despite setbacks, areas like the joinery business show resilience and strength, contributing positively.
Morrisroe Group, a key player in the construction industry, has faced another year of financial difficulties. Reporting a pre-tax loss of £1.3 million in 2023, the company highlights a notable issue with unforeseen costs affecting their 2022 projections. A prior period adjustment identified an extra £11.5 million loss due to unexpected expenses on a concrete frame scheme. This adjustment reflects an oversight in cost forecasting, which has since been addressed by reviewing legacy projects and rectifying forecasting inaccuracies.
Chief Executive Brian Morrisroe provided insights into these financial challenges, citing specific project issues that escalated costs unexpectedly. The adjustments were necessary to align with the real financial impact experienced in 2022, driven by errors in cost estimation for multiple schemes. Notably, the company acknowledges these challenges while emphasizing their current improved position compared to the previous year.
The inflationary environment has compounded these difficulties, particularly for the business segments dealing with legacy fixed price contracts. Materials inflation has significantly squeezed margins, jeopardizing the profitability of their main structures operation. Additionally, the newly acquired demolition business, Cantillon, suffered a pre-tax loss of £515,000 as its revenue plummeted from £34 million to £16 million.
Nevertheless, some areas within Morrisroe have shown resilience. The joinery division stands out by successfully collaborating on prestigious projects in London, including the One Nine Elms and Western Yards towers. This segment has continued to deliver robust results, counterbalancing some negative impacts from other parts of the business.
Despite a challenging financial landscape, Morrisroe maintains a strong balance sheet and cash position, which has helped mitigate the ongoing inflationary pressures tied to fixed price contracts. The firm is optimistic about returning to a normal profitability trajectory, thanks to new contracts with better risk-sharing terms and improved supply chain conditions. Significant client interest in a “front-end cluster” approach, involving specialist contractors from the outset, suggests strategic initiatives are progressing.
Remaining provisions amount to £6 million, of which £4.3 million was restated previously. This includes a £2 million allocation for fines and court costs related to the Competition and Market Authority’s investigation into demolition sector bid rigging, marking another hurdle the firm is overcoming.
While navigating significant financial and operational challenges, Morrisroe Group remains focused on improvement and strategic growth.
