Wates joins £2bn revenue club

Wates has joined the handful of UK contractors that turn over more than £2bn, after reporting a 17.6 per cent increase in revenue to £2.1bn.

The Surrey-headquartered company also posted a 43 per cent increase in pre-tax profit, from £33.7m to £46.9m, for the year to 31 December 2023. Its pre-tax profit margin increased from 1.66 to 2.14 per cent.

The company’s latest turnover figure sees it join five other contractors that turned over more than £2bn in their last accounts: Balfour Beatty, Morgan Sindall, Kier, Laing O’Rourke and Amey. Neither Bam nor Mace achieved the figure, with revenues of £1.99bn and £1.93bn respectively.

Each of Wates’ divisions saw increased revenue last year, with the construction division crossing the £1bn revenue mark after turning over £1.17bn, a 22 per cent increase from £960m. Average project size in the divisions increased to £48.3m.

Wates’ property services, residential and development businesses saw revenues of £544.7m, £322.7m and £141.3m respectively.

Wates’ forward order book ticked up by £100m last year to £8.5bn, despite a £300m drop-off in the group’s construction order book. Its year-end cash fell from £206.9m to £138m.

Wates chief executive Eoghan O’Lionaird told Construction News he was pleased with the financial results given the market conditions and suggested he could not guarantee a turnover above £2bn or a margin above 2 per cent in 2025.

“We’re delighted with the results: margin up strongly, by 37 per cent, on revenues north of £2bn for the first time. We couldn't be more pleased,” he said, adding that Wates’ order book had grown “in a market that, at least by our estimates, was probably flat or went backwards”.

O’Lionaird declined to give a turnover prediction for its 2024 financial year, saying he had “got out of the forecasting turnover mode, having burned my fingers for some years”. Last year, however, he correctly predicted to CN that the company’s turnover would hit £2.1bn.

O’Lionaird instead said that the company’s “strong order book suggests […] we can continue to grow the business”, adding: “If we’re able to do that, again, in the context of this market, we should be very pleased.”

The executive, who took up his post at Wates in February 2023, also suggested Wates would be doing well to obtain a similar margin – but stressed that margin was a key focus for the business.

“Two per cent profitability in this market, in the built environment UK, isn’t easy for anybody. We certainly had to work hard for it [and] everybody else does too,” he said.

“We’re very keen on improving the margin year on year even a smidge – the revenue is interesting, and some people will hang their hat on £2bn and say ‘this is success now for us’ – [but] we’re keen to continue taking away stuff, out of the organisation, using lean methods.”