Carey pre-tax profit slides despite turnover boost

Carey Group posted higher turnover in its 2022/23 financial year but a profit slump almost eliminated its margin, its parent company’s latest accounts show.

In the 12 months to 30 September 2023, the contractor’s turnover increased by 9.8 per cent from £366.4m to £402.4m, according to Araglin Holdings’ annual report.

The cost of sales fell by £1.7m to £362.9m but Carey’s pre-tax profit of £42.4m in 2021/22 shrank to just £657,000 the following year, delivering a margin of just 0.2 per cent, which Araglin attributed partly to “the investment phase of the development cycle”.

Profit was partly higher in the previous year because of a one-off disposal of asset investments worth £92.8m.

Group chief executive Jason Carey hailed a “significant turnaround” in revenue and EBITDA, which improved from a loss of £38m in 2021/22 to a profit of £9m the following year. The firm paid out interim dividends of £11.5m, more than double the 2021/22 interim payout of £4.5m.

Carey added: “Our contracting businesses have already secured 80 per cent of our FY24 order book and have a strong pipeline of over £350m.”

Araglin includes Carey and its multiple subsidiaries, as well as dry-lining contractor BDL and waste-brokering service Seneca. Carey Group ranked 51st in the CN100 2023 list of top contractors.

The contractor won 38 projects in 2022/23 in digital and construction engineering, demolition, cut-and-carve and facade retention, remediation and enabling, superstructures, basements, and public-realm landscaping.

Examples include work on three energy-from-waste plants for Hitachi Zosen Inova; a “significant package of works” for Imperial College as part of the White City Masterplan in London (CGI pictured); concrete works for BAE Systems at the Govan shipyard in Scotland; the Project V cable factory in eastern Scotland; and demolition and landscaping works at the Natural History Museum in London.

In a statement accompanying the annual report, Fiona O’Donnell, executive chair of Araglin Holdings, said that Carey Group concluded a two-year restructuring period that saw the closure of non-core operations, “including our contracting business in Ireland and the closure of our Wembley office, relocating our Wembley teams to our offices in King’s Cross and Aston Clinton”.

This restructuring contributed to a fall in Carey Group’s average monthly headcount from 966 employees in 2021/22 to 821 the following year.

In addition to net cash of £48m at the end of the latest financial year, Carey has access to an undrawn £15m revolving credit facility with Allied Irish Bank that is available until June 2027.

Carey Group’s current three-year strategic plan to September 2026 includes a focus on “targeted, measured growth in line with inflation, margin improvement through disciplined contract take-on and a considered approach to project management”, O’Donnell said.

“This is supported by continued investment on digital transformation and plant and fleet renewal, to ensure we make it more efficient and safer for our teams to go to work,” he added.

O’Donnell referred to £20m of investment in Carey’s plant headquarters at Aston Clinton; £15m on new vans and excavators; and £10m on “enhancing digital capabilities and efficiencies”.

This investment is being funded partly by £10m in asset financing from Allied Irish Bank, NatWest and Paragon Bank. Araglin noted that these facilities will “help ensure the group maintains its financial armoury to withstand any future industry shocks such as those witnessed in recent years”.

Carey company Scudder was among the 10 demolition firms fined by the Competition and Markets Authority in March 2023 following a probe into bid rigging. While she did not explicitly refer to this, O’Donnell described “significant steps” in the latest financial year “to strengthen our processes to ensure a culture of compliance and ethical conduct across the entire business”.

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