Group accounts from Laing O’Rourke report a pre-tax loss of £288.1m for the year to March 31 2023
After last year’s pre-tax profits of £2.7m, Laing O’Rourke has posted a £288.1m loss in 2023, citing “extremely challenging market conditions.”
Revenue and turnover rose in multiple regions, but substantial pre-tax losses were reported across the globe.
Laing O’Rourke’s Europe operations grew turnover from £2.18bn to £1.84bn, but almost tripled their profit in the wrong direction, with last year’s £56.3m profit becoming a £148.7m pre-tax loss in 2023.
In Australia, pre-tax losses hit a staggering £101.7m from £6.7m last year, as turnover rose from £1.19bn to £1.13bn. This was partially impacted by a historic contract in Australia that was terminated six years ago but still remains subject to arbitration.
Having started the current financial year with a record order book of over £10bn, the company said that inflation severely affected profit margins on UK contracts.
Despite the pre-tax losses, Laing O’Rourke remains positive about the future year
Chief financial officer Rowan Baker said: “I am encouraged by the fact that in FY23 we delivered strong pre-exceptional group revenue growth of 13% (to £3.4bn) versus FY22, ended the period with gross cash of £428.1m, net cash of £286.3m, and added £1.4bn to our group order book. These are positive indicators for our future performance.
“Together with the whole UK construction sector, we were presented with extremely challenging market conditions during this trading period. Unprecedented inflation impacted margins on a small number of our fixed-price projects in the UK. While it had no immediate cash impact, provision for an exceptional item on a legacy project in Australia added to our loss.
She added: “We have seen strong performance across the business in the first half of the current financial year. Our revenue increased 22% versus the same period prior year and results are well ahead of management’s expectations at £31.4m EBIT.”
Chief executive Ray O’Rourke emphasised the need for manufacturing-led methods of construction
In the company’s annual report, O’Rourke commented that “during my long career, I cannot recall such a sharp surge in costs.”
“The sector must embrace a technology and innovation-enabled shift to manufacturing-led methods of construction.
“It is the only way to change the nature of the work we do. Making such a shift will enable us to attract a much more diverse range of people to the best industry there is and achieve a step change in productivity which will give clients certainty.
“It will also help create a more sustainable built environment and improve the health, safety, and overall wellbeing of our greatest asset – the people who pick up the tools every day to deliver.”
He also stated that “with a record order book and a return to profitability in the first half of FY24, I remain very positive about the future.”
