Electrical contractors have undoubtedly experienced a stronger performance during 2014/15 compared to the previous year, with average turnover growth for the leading 50 companies in this market at 11%, and a number of businesses reporting improving conditions in the electrical contracting market, writes Fiona Watts, researcher at AMA Research.
Profit margins have increased on average by as much as 50% across the top 50 electrical contractors in their last reporting period. This looks to have been as much a result of improving market conditions and new contract wins, as of cost control and business rationalisation.
In addition, many contractors have attributed improving profit levels to concentrating on selective tendering with a focus on higher margin contracts.
The number of companies in the Top 50 that reported a loss has decreased from 11 to 6, based on the latest figures for the businesses featured in this year’s edition.
However, there have been some casualties, most notably EIC Limited, which had a turnover of £80m with around 400 employees, but was placed into administration in June 2016, Facilitas TES, which went into liquidation in March 2015, and DH Fathers, which no longer operates.
In addition, Imtech Technical Services’ parent company entered administration in the second half of 2015, though most of the UK subsidiaries were sold to new parent Essci Engineering Services and continue to operate.
A number of the larger players within the market also reported substantial losses compared to the previous year.
Other significant corporate activity in the sector included the acquisition of Shepherd Engineering Services (SES) by Wates Group in October 2015, the purchase of GSH UK by ISS UK in January 2015 (now called ISS Technical Services) and the restructure and global rebranding of Cofely GDF Suez as Engie, implemented in January 2016.
At the time the accounts were published, the majority of companies expected strong results for 2015/16 and had high expectations for market conditions, with prospects looking particularly bright in the London market.
The overall performance of the electrical contracting sector is likely to look even more positive once accounts for 2015 become available for all companies on the listing.
However, whether individual companies’ performances will remain strong in 2016 remains to be seen – the uncertainty and fall in business confidence the market is currently experiencing is bound to have a negative effect on new contracts and overall construction and RMI levels, which could last for another 2-3 years until the impact of the EU Referendum becomes clearer.