Owen Pugh profits down as construction sector remains challenging

North East construction firm The Owen Pugh Group, say profits have fallen by 25% due to “continued industy challenges” but have increased turnover to almost £32 million and vow to continue investment in the business.

The civil engineering contractor, which employs 370 staff across five regional sites including its head office in Dudley, Northumberland, has announced a growth in turnover of more than 23% on the previous year, however it has seen operating profits decrease by 25% to £923,752 between April 2012 and March 2013.

Owen Pugh chairman, John Dickson, says that the decline is due to continued weakness in the construction industry coupled with the impact of bad weather during the trading period.

He said: “We carry on growing despite the recession, but the combination of bad weather and tough markets made profits hard to find.

“Despite continued cost inflation, the lack of work across the industry means we have been unable to push prices up to protect margins.

“The weather, and particularly the wettest summer on record during 2012, presented both challenges and opportunities to the diversified Group. On site productivity was adversely impacted while the heavy flooding had quite the opposite impact on our drainage business.”

Despite the figures, Mr Dickson remains positive about the future of the business and remains committed to continued investment in emerging technologies, health and safety and to staff training and development.

He said: “Given the trading conditions, we’re pleased with these results which are a true testament to the continued hard work and effort of our employees.

“Our approach is to prioritise the long term increase in value over the short term achievement of profit and this is evident in areas such as staff training and development to which we have devoted significant resource. We will continue on our growth trajectory and are building a solid base for the business in the future.”

Owen Pugh is already seeing the benefits of improved market conditions during the financial year to date, with recent projects competed for underway for clients including SITA UK, the NHS and the National Trust.

Mr Dickson added: “Conditions have improved somewhat since the end of the last financial year, and we are certainly seeing the impact of this, though as yet, a return to growth in the civil engineering industry in the North East unfortunately remains a distant prospect. When this recovery finally comes, we are most certainly ready to take advantage.”

The range of schemes undertaken by Owen Pugh includes all aspects of land reclamation, earthmoving, demolition, port, harbour and sea defences, urban renewal, environmental improvements, main drainage and development infrastructure.

The company also provides plant hire and is a supplier of construction aggregates. Owen Pugh traditionally operates as a principal contractor but has developed close working relationships with a number of large contractors to work as a sub-contractor on larger schemes.