Engineering specialist NG Bailey has returned to the red in its last financial year.
The firm posted a £25m pre-tax loss for the year ending 3 March 2023, down from a £3m pre-tax profit the prior year. The group had previously made a £4.4m pre-tax loss in 2021.
The majority of losses came from the engineering division, where the firm lost money on multiple major fixed-price contracts.
NG Bailey chief executive David Hurcomb said: “Costs have risen substantially, above what we could have ever anticipated.”
Hurcomb said that fixed-price engineering contracts had been particularly vulnerable to inflation, as contracts were signed months or years before work started on site. “We have taken a big hit, but that is behind us,” he said.
Profits were further stymied by rising energy prices and interest rates, he added.
NG Bailey also took a big hit when Britishvolt collapsed in January 2023. The firm lost £6.8m of equity invested in the vehicle-battery start-up’s planned gigafactory. Despite the failure of Britishvolt, Hurcomb remained optimistic about the gigafactory pipeline.
“The government has stepped up after Britishvolt,” he said. “They’re waking up to the fact that unless we make our own batteries in the UK, we won’t have a car industry.”
The engineering specialist showed signs of health in other respects: its annual turnover increased by £32m to £532m, and the firm retained net assets of £121m.
NG Bailey said its services divisions “achieved record levels of profitability” with “strong cash generation”, and it now accounts for almost half of group turnover.
The firm’s order book increased by £300m to £1.3b, largely buoyed by long-term major infrastructure projects. Hurcomb said the company was “positioned for growth in the decarbonisation sector”.