THE construction sector in
Scotland expanded more slowly and faced tighter margins than its counterpart for the UK as a whole over the last three years.
The rising cost of raw materials, difficulties in winning high-margin work and challenges accessing traditional forms of lending were cited in a survey commissioned by accountancy firm Henderson Loggie, which shows turnover growth at Scottish firms lagged the expansion seen at UK level. While UK firms increased revenue by 14.8 per cent, on average, over the last three years, Scottish companies grew revenue by 8.4%, according to the survey, based on the views of 1,708 construction businesses, including 157 in Scotland.
The report underlined the
challenges facing different parts of the sector in Scotland, with firms towards the small end in scale experiencing the sharpest downturns in profitability.
Construction firms turning over between £5m and £10m saw
profits dip by 66.6% on average, compared with a 5.3% fall in profits at UK level. Firms in Scotland turning over £100 million or less saw profits fall by 19.2%.
Meanwhile, gross profit margin percentage was found to lower in Scotland, having expanded from 16.54% to 17.25% north of the Border over the period, compared with growth from 18% to 20% for the UK, the survey said.
And while Scottish firms saw their gross profit percentage dip to 7.61% from 8.46%, the percentage remained stable across the UK .
The figures comes shortly after the latest Accountant in Bankruptcy revealed a four per cent rise in corporate insolvencies in Scotland in the third quarter, to 232.
Shona Campbell, director of business recovery and insolvency at Henderson Loggie, said: “City Region Deals and large scale road and infrastructure projects have underpinned sector performance in Scotland over the past five years, yet this report, together with the latest Scottish insolvency statistics from the Accountant in Bankruptcy which show a rising trend in corporate insolvencies, presents a mixed tale.”
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