Construction contractor Laing O’Rouke reveals it spent £23m restructuring the firm to ensure greater productivity and reduce costs
Laing O’Rourke reported last month that the group made an overall loss of £246m in the last financial year, and Laing O’Rourke plc, which covers Europe and Canada but not Australia, also suffered a pre-tax loss of £267m.
The firm said £194m was lost from operations, £73m in exceptional costs including restructuring, and £43m from contracts relating to the Design for Manufacture and Assembly (DfMA).
In the report, Ray O’Rourke said “significant lessons have been learnt from these projects, all of which were won in 2013, a particularly aggressive price driven market”.
The firm underwent significant restructure last year to the tune of £23m in a bid ensure greater productivity. Most of this figure was spent on redundancies, advice and refinancing costs. Average wages for the firms UK staff fell from £49,400 to £45,400. The highest paid director also took a hit, seeing his pay fall from £1m in 2015 to £635,000.
Part of the restructure saw the firm split into separate construction and manufacturing divisions. As a result of this change some 200 jobs were lost.
Furthermore, Laing O’Rourke was also hit with a £5.1m compensation bill for claims filed under the Construction Workers Compensation Scheme for blacklisted workers
Laing O’Rourke plc, a member of Laing O’Rourke Corporation, saw total revenue fall from £1.68bn to £1.63bn
However, despite all these difficulties directors at the corporation said they had every confidence they can comply with the stipulations set by the bank following a refinancing of the group last April.
Difficulties in the sector?
Laing O’Rourke is not the only construction contractor to report issues with its bottom line. Earlier this week Bovis Homes’ chief executive David Richie announced he was stepping down just days after the firm warned its profits would be lower than expected. The housebuilder said it had failed to complete the number of homes it thought it would by the end of 2016, with 180 sold private homes would not be handed over to buyers by the end of 2016, which would see a shortfall in full-year profits against market expectations.
Richie had been chief executive since 2008 and will be replaced in the interim by finance director Earl Sibley.