County Durham’s Esh Group toasts healthy profits after year of headwinds

County Durham construction company Esh Group has hailed healthy profits levels in the face of considerable industry headwinds.

The company, which has civil engineering, affordable housing, commercial build and private housebuilding divisions, saw turnover increase by £6m to £261m, although operating profit dropped by £1m to £3m. Chief executive Andy Radcliffe said the firm’s “meticulously designed business model” helped to soften the impact on 2022’s operating profit.

The group’s earnings faced pressures of long duration contracts that were priced pre-pandemic, rising cost inflation levels, supply chain constraints and labour shortages. However, longer-term contracts were concluded in the first half of 2023, which helped to offset many of the challenges experienced during the financial year. The group delivered liquidity of £19m at the year end, and did not drawn down from its £7m revolving credit line, remaining debt free.

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Mr Radcliffe said: “Our focus on targeting routes to market and key sectors that present a lower risk profile has provided a finely balanced portfolio of revenue which has served to insulate us from the extremes of the challenges experienced by the broader industry. Whilst of course we have not been immune to these challenges, many of which have led to the sad demise of a number of highly respected businesses in our regions, the strength of our core revenue model has been the key differentiator in our ability to navigate these industry-wide headwinds.

“Our business model ensures that we can balance out the peaks and troughs of individual market segments over their respective economic cycles which offers a much more stable and predictable backdrop. Above all, targeting sectors that present near term growth opportunities, such as affordable housing, utilities and general infrastructure, while simultaneously reducing our exposure to more technically and commercially challenging sectors of the market, provides us with a level of resilience that has been the hallmark of both our maintenance of profitability during 2022, and our expectations for both turnover growth and margin expansion over the coming years.”

Esh Group said its forward order book is at a record level, totalling £600m, and includes flagship schemes such as the landmark restoration of the Tyne Bridge, and the Stockton Waterfront regeneration scheme.

It also added the largest contract in the company’s history to its affordable housing portfolio earlier in 2023, a £56m new build scheme in Middlesbrough, in which Esh is set to deliver more than 540 new affordable homes with Thirteen Group in the coming years.

Meanwhile, the last year has seen Esh launch a new education programme aimed at embedding construction into the school curriculum, increasing T-Level and undergraduate placement opportunities and growing apprentice numbers to 8% of the workforce.

Mr Radcliffe added: “Our achievements, once again, are down to the unwavering efforts of our highly skilled and dedicated team of colleagues who have battled hard to manage the challenges we faced. We are exceptionally grateful to our clients, our supply chains and wider stakeholders, who value the role collaboration plays in ensuring mutual success. We look forward to the coming years with cautious optimism and a business model that, simply put, sees us stick to what we are good at, with supply chains that we know, and clients with whom we can nurture long term partnerships.”