Galliford Try sets ambitious growth target by 2018
House building and contracting group Galliford Try plans to ramp up turnover at its housing and construction businesses by around half over the next four years.
Chief executive Greg Fitzgerald said the group had put in place improved bank facilities of £400m to support a big growth push in the recovering market.
He said that following a year of sustained and improved opportunities, Galliford Try had set its sights on increasing its building and infrastructure businesses by around 50%.
Fitzgerald said: “We expect turnover to increase from an improving private sector as well as an increased participation in frameworks and major projects.”
He added: “Maintaining our focus on risk management we will continue to prioritise margin and strict cash management. In the short-term we continue to expect operating margin to fall, but then to rise towards 2.0%.”
The group has also set out similarly ambitious expansion plans for its Linden Homes business in the 2018 growth plan.
Fitzgerald predicted operating margins would rise towards 18%, as the housing recovery accelerated.
He said: “We are also targeting a disciplined expansion in volumes to increase revenue by 50% from the record 2013 level.”
Linden Homes will continue to focus on well located sites principally in the south and south east, and its increasing bias towards houses over apartments.
Fitzgerald said the firm’s partnerships business had now been realigned within housebuilding to create a regeneration and land led contractor/developer with a refocused management team.
The business will target an increase in mixed tenure turnover of more than £60m, with the revenue from the contracting side rising by 200% to fund future regeneration and land led activities.
This would see blended operating margin to increase to 3.5 – 4.0%.
In the land market Galliford Try plans to acquire a 14,000 units across Linden Homes and Partnerships and then maintain a land bank of 4 years supply.
Fitzgerald unveiled the group’s expansion plans as he revealed pre-tax profits had risen 18% to a record £38m in the first half of the year from turnover up by the same rate at £803m.
Within the construction division, margins at the building business fell back from 2% to 1%, due to supply chain challenges. Profit from operations of £2.1m was achieved on revenue of £212m.
Profits from infrastructure work were also slightly down at £3.4m on revenue of £186m.
Galliford Try 2014 interim results by division:
Revenue: £398m; (2013: £401m)
Profit: £5.5m; (2013: £7.4)
Operating margin: 1.4%; (2013: 1.8%)
Revenue: £328m; (2013: £273m)
Profit: £44m; (2013: £34m)
Operating margin: 13.5%; (2013: 12.4%)
Galliford Try Partnerships
Revenue: £101m; (2013: £43m)
Profit £1.9m; (2013: £0.5m)
Operating margin 1.9%; (2013: 1.2)
First published in Constructionenquirer 19.02.14