Contract wins help Clugston move into profit

The Scunthorpe-based company, which is celebrating its 75th year, saw group turnover in the year ending January 31, 2012, increase by 29 per cent to £83.8m. Turnover including joint ventures hit £121.6m, almost doubling last year’s figure.

The Clugston Group is a group of businesses in construction, civil engineering, logistics, property development and facilities management.

The group said it remains optimistic about the future as it has secured “an impressive forward order book” in its construction business, is entering new markets in its logistics business and its property development activities are making “considerable progress”. But it said the medium term economic outlook will remain difficult.

Chief executive Stephen Martin said he expects the firm, which has over 600 employees, will create 100 new jobs over the next year, and achieve a turnover of over £100m, excluding joint ventures, in this financial year.

Mr Martin said: “The success is down to each area of the business expanding in terms of the workload that we are achieving and the margins we are able to gain in the current environment, so basically we are winning a lot of profitable work at the minute. We have secured major contracts in our construction business and we have changed the focus of the business in terms of looking at the green agenda and the opportunities in that sector.”

Clugston’s construction business has partnered with a French process company, which has helped it make inroads into the green market and with whom it has secured three major contracts in the energy from waste sector at Lincolnshire, Staffordshire and Oxfordshire.

Mr Martin said Clugston has also been selected as the preferred bidder on several further energy from waste schemes.

He said: “They are big projects where we are taking the waste from local authorities and basically turning it into energy rather than it just going to landfill because in this country we are going to have a lack of landfill and the landfill tax is increasing year on year.

“Construction is a very difficult market at the moment because of the state of the economy. There’s less work around and more competition, so we are looking at areas where there is work and opportunities to use our skills and expertise.”

Last year’s £4.4m loss was as a result of some of these projects being delayed in the planning process, said Mr Martin, while margins were “very tight” and the company didn’t win as much work as it has done this year.

Mr Martin said: “We are doing very well and this year’s going to be even better I would expect. We are ahead in the first quarter in terms of turnover and profitability. And we expect to deliver even better results next year.”

Pressure on margins resulted in a £0.4m loss on a £9.8m turnover in Clugston’s logistics business in the financial year to January 2012. Mr Martin said fuel prices have “hit a lot of logistics operators hard”, but he said the plan was to specialise to build new markets.

He explained: “We are now moving into transporting petrochemicals. Because we are near the Humber ports near Hull and Immingham we have invested in a new fleet of tankers. So we are now transporting fuel for various companies.

“We remain cautious about the wider economic situation. We don’t think it’s going to get any easier in the wider economy for quite some time.”

However, he said the group will focus on niche markets and areas of expertise where there is growth.

The group’s results showed cash balances had increased more than eight-fold to £15.7m. A final dividend of 5p per share will be recommended by the board for approval at the annual general meeting.

The majority of Clugston Group is owned by John Clugston, chairman, and his immediate family. Snaith-based chemicals business Croda owns just over 6 per cent.

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