HG Construction has achieved its highest turnover yet, surpassing £400m, but profits have decreased significantly for the second consecutive year.
- The company’s turnover in 2023 reached £424m, a 26% increase from £336m in 2022.
- Despite revenue growth, gross profit shrank to £14.7m in 2023, down from £22m the previous year.
- Profit margins have narrowed due to inflation and fixed-price contracts, causing a decline in profitability.
- Looking ahead, HG Construction anticipates stronger margins as past fixed-price contracts conclude.
HG Construction has reached a significant milestone, with its turnover surpassing £400m for the first time in its history. In 2023, the company reported a turnover of £424m, reflecting a substantial 26% increase from the previous year’s £336m, and a remarkable 75% growth since 2021. However, this impressive revenue growth came at a cost, as profits continued to reduce for the second year running.
Gross profit has decreased considerably, falling to £14.7m in 2023 from £22m in 2022 and £29.9m in 2021. The profit margins have similarly suffered, with the gross margin reducing to just 3.8% in 2023, compared to 6.5% in the previous year, and 12.3% the year before. This declining trend extends to profit before tax, which has fallen from £24.9m in 2021 to a mere £6.4m last year.
Fixed price contracts and rising inflation have been identified as the primary factors contributing to HG Construction’s diminished profitability in 2023. The company has described the year as ‘very challenging’, primarily due to these factors putting pressure on their financial performance. Despite this, there is optimism for improvement in 2024 as the company moves past legacy fixed price contracts.
Over the past five years, HG Construction has expanded into new sectors and regions, such as Leeds, Manchester, and Bristol, illustrating its strategic growth initiatives. The firm has also invested in a manufacturing facility in Hull to produce bathroom pods and utility cupboards, which was acquired from Kubex. Chief Executive Adam Quinn expressed pride in their growth despite challenges, stating, “We are pleased to have achieved our growth targets over what was an extremely challenging year with record price inflation.”
Quinn has highlighted a shift in focus for the company, moving towards revenue stabilisation and strengthening internal structures. He has emphasised investment in internal delivery capabilities as a means of safeguarding against future economic volatility. HG Construction is committed to maintaining high standards, ensuring quality, and delivering exceptional service across its operations. The year 2024 is expected to bring more certainty and stable growth, with a robust pipeline of work secured in core sectors.
HG Construction aims to stabilise its revenue and strengthen its internal processes as it looks forward to improved financial performance in 2024.
