Study focused on Q4 2008 performance warns that Brexit uncertainty, increased costs and late payments are all expected to restrict industry income this year
The financial outlook of building services companies over the first quarter of 2019 is described as “subdued” with a majority expecting their incomes to either stay unchanged or fall in 2019, an industry survey has found.
A study of hundreds of companies by a range of industry trade bodies such as the ECA, BESA, SELECT and SNIPEF, found that 74 per cent of respondents did not expect to post increased revenue due to a number of ongoing factors such as increased costs.
Particular concern has been raised in the findings that limited industry revenue growth is expected to be compounded by a surge in costs and ongoing market uncertainty concerning Brexit.
The latest survey looked specifically at financial performance during the last quarter of 2018 and found that 26 per cent of companies posted increased turnover during the period. Another 26 per cent of respondents said their turnover had fallen over the same quarter.
Among other key findings of the survey were that 61 per cent of the engineering services companies surveyed saw material costs rising over the last three months of the year compared to the third quarter of 2018.
Over the same period, 48 per cent of the survey group said that their labour costs had risen.
The survey also looked at issues concerning payment performance and retentions, which have been a major focus of campaign for legislative reform in recent years. 77 per cent of respondents said they have been paid late - more than 30 days after a job - when working on a public sector project. The same figure rose to 83 per cent in terms of commercial projects.
58 per cent of the same group said that over ten per cent of their turnover was tied up in retentions during the last quarter of 2018. The figure was up 6 per cent on the previous quarter, according to the study.
Steve Bratt, chief executive of the ECA, said the figures reflected a squeeze on margins that had been compounded by higher costs for labour and materials.
“The current business climate is challenging, with firms facing the knock-on effects of Brexit uncertainty, more challenging contractual conditions and ongoing payment issues.”
BESA chief executive David Frise cited recent forecasts that predicted nominal market growth this year of 0.3 per cent, despite an expected increase in material prices of up to 5.1 per cent.
He said, “The challenge for contractors across the sector is maintaining cash flow in a climate where payment issues still reign. It is in times like this that the work of organisations like BESA, ECA, SELECT and SNIPEF is even more vital than ever.”