Hutchinson Builders experienced a dip in profit in the 2019 financial year, despite customer receipts which exceeded $3 billion.
The fall in profit margin came down to the rising costs of labour and materials, with Hutchies’ receipts total amounting to $2.8 billion in construction revenue, but gross profit hitting a low of $51.3 million.
The group’s 1.8 per cent profit margin was more than expected, given Hutchies Chairman Scott Hutchinson had announced in February this year that it was forecasting only 1.25 per cent.
Net profits fell further, down to $10.7 million from $26.5 million the previous financial year.
The Ai Group’s Performance of Construction index reported a number of companies felt financial stress thanks to increased construction costs as a result of rising energy prices and the higher cost of commodities and imported construction materials.
Hutchies involvement with collapsed Ralan Group also added to financial duress.
The builder had begun work on the group’s $1.4 billion Surfers Paradise ‘Ruby Collection’ apartment development which ended abruptly when Ralan went into administration in July.
Related News: Ralan Group Administration Blindsides Hutchinsons
The developer’s collapse left Hutchies in the lurch, with a debt provision of $1 million for all amounts invoiced and unpaid, a generous $4.4 million reduction on the total bill.
Despite this, Hutchies reported a $75 million increase in contract assets for the 2019 financial year, to the tune of $156.4 million.
Hutchies’ pipeline is an indication of the company’s steady growth, with projects including the $207 million The Landmark residential tower in Sydney’s St Leonards and The Star residences at the Star Casino on the Gold Coast.
The builder, which touts a combined project value of over $32 billion, was ranked Australia’s sixth largest privately-owned company in the AFR’s 2019 Top 500 Companies list.
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