Structural steel firm Billington Holdings reported double digit growth in revenue and profit in 2017 and said it has made a good start to 2018 with a robust forward order book.
The Barnsley-based firm managed to limit the damage caused by Carillion’s collapse in January to £106,000 - which was the balance outstanding with the firm at the end of 2017. Billington said it had restricted its trading with Carillion over recent years so the only part of its business that was affected was its hoarding operation, hoard-it. The £106,000 balance was provided for in full in its 2017 results.
The group’s CEO Mark Smith said: “We suspected that Carillion were in some form of trouble. We credit insure all of our client base. Thankfully we weren’t affected apart from in a minor way.”
The group’s finance director Trevor Taylor added: “We didn’t actively pursue any work in Billington with Carillion. We didn’t have any ongoing projects.”
Billington reported record revenue at its structural steel division on a like-for-like basis and said it increased output to over 30,000 tonnes.
Pre-tax profit rose 16 per cent to £4.4m in the year to December 31 and the group has increased its dividend by 15 per cent to 11.5p. Revenue rose 16 per cent to £73.5m
Mr Smith said: “A strong performance from all group companies throughout the year has significantly contributed to this solid set of results, thanks to a number of divisions operating at near to full capacity. This, coupled with a good pipeline of projects, positions Billington encouragingly for the coming year.”
He said the UK construction industry has experienced a number of developments since the beginning of the year, namely Carillion’s demise and a marked increase in the cost of raw materials. The cost of structural steel sections, the company’s primary raw material, has increased by 40 per cent during the two years to March 2018.
Despite this, Mr Smith said that the UK consumption of steelwork is on the increase.
“It is expanding due to the development of large warehouses from the likes of Amazon and Ikea. The sector is on the increase. Steel prices can’t continue to rise,” he said.
Asked whether plans by the US to introduce a 25 per cent hike on steel tariffs will affect Billington, he said: “The proposed tariffs apply to raw steel, not fabricated steel. Also, we don’t have any exports to the States. The only thing it may do is affect the price of scrap steel.”
The group said UK structural steel demand is forecast to remain stable throughout 2018 and 2019 and the board will closely monitor further developments in the industry, along with any potential impact these may have on the group.
The group said its expansion strategy at the Shafton facility in Barnsley is continuing and Billington is well positioned to adapt to changes in the wider industry. The structural steel business worked at, or near, full capacity across all the group’s sites for the majority of the year, which resulted in a record level of output.
Margins were maintained despite market pressures on both selling prices and input costs.
Mr Smith said that although the group has had an “excellent“ year, the group acknowledges wider market developments and pressures which may influence Billington in 2018.
“However, the group’s size and capabilities mean it is well positioned to adjust to changes, as they occur in the construction industry,” he said.
He added that Brexit is continuing to have an impact on the market.
“A number of projects have been under pressure due to the uncertainty of Brexit,” he said.
“We’ve had a number of projects stall. They tend to be speculative commercial buildings. Most developers that have had a hiccup tend to be London-centric.”
In contrast, Billington is seeing expansion in Leeds, Sheffield, Barnsley, Liverpool and Manchester.
Last year Billington Structures was awarded its largest contract to date, a large distribution centre in the South West of England, reported to be for online giant Amazon. Mr Smith said this was a positive milestone for the company and the project was successfully delivered ahead of schedule, with complete satisfaction of the client.
“This further cements and demonstrates the company’s ability to deliver the most challenging of projects,” he said
Billington Structures also undertook a number of other significant projects which included IKEA in Sheffield, London School of Economics in London, Coventry Leisure Centre, and Lime Street Student Accommodation in Liverpool.