Member Article

Esh Group remain confident as profits fall

Durham-based construction company, Esh Group, have seen profits fall as it absorbs the initial costs of expanding into Yorkshire and Cumbria.

Operating profits fell to £2.1m as margins also continued to be squeezed, however the firm achieved turnover of £170m in 2011, a similar level to that of 2010.

Expansion into Yorkshire, Cumbria and the North West supported the turnover, with a joint contribution of over £25, reported by Esh Group’s offices in Leeds and Kendal.

As the results were released, Esh said their housing building business, Dunelm Homes, continued to impact negatively on the results.

Brian Manning, Chief Executive of Esh Group, explained: “These figures come as no surprise; the market is weak. Although we are pleased to have maintained overall turnover at Esh Group we live by the saying; ‘turnover is vanity, profit is sanity and cash is King’.

“That’s our focus, we are managing costs, we are profitable, we have a strong balance sheet and a healthy cash position.

“Although house building is still affecting profits the team is doing very well, their sales are ahead of target and the finances of the business are contained. So, in short, we’re strong and we’re working hard for our clients.

“It is difficult as a medium size business to compete against nationals in public procurement contests. We are though seeing signs that procurers are becoming more receptive and starting to understand the value of having businesses of Esh Group’s technical and financial strength, which commit to local investment and employment, as an alternative to the nationals.

“Private construction companies with our balance sheet are rare and we are working really hard to maintain our market.”

Austin Donohoe, chairman of Esh Group announced the results at the company’s AGM, and said: “Esh Group is in a strong position to ride out the construction market downturn. We’re committed to a clear strategy which is working.

“We will continue to look outside the North East, which is being hit harder than most as far as construction goes, to develop our business. In doing so we will take our dedicated approach to working with the communities in which we earn our living to those communities.

“Our passion and skill in to helping young and disadvantaged people to improve their employability skills is well-established and recognised at a national level. We are already extending the bespoke schemes for which we are known in the North East into Cumbria and Yorkshire.”
Overhead costs at Esh had been reduced by £1.2m in the first six months of 2012. Brian Manning added: “Although we’re ahead of plan for 2012 the lack of visibility of forward workload is a real problem; it’s very difficult to project beyond 6 to 8 months.

“One thing we won’t be doing is moaning; we’ll keep working hard and exploring all means to move the business forward. In the main we are happy that we are doing all we can and we’re very proud and pleased that our people are responding to the challenges.”

This was posted in Bdaily's Members' News section by Tom Keighley .