Family-owned civils contractor J Murphy & Sons boosted its pre-tax profit by 50 per cent last year, despite a £70m fall in turnover.
In a reversal of its 2022 performance, when profit fell but revenue rose, the firm’s latest annual accounts for the 2023 calendar year showed that turnover decreased by 4.7 per cent to £1.42bn.
Pre-tax profit rose by £22.2m to reach £66.8m, compared with £44.6m the year before.
As a result, Murphy’s margin broadened from 3 per cent in 2022 to 4.7 per cent in 2023.
Chief financial officer Joe Ledwidge attributed the improved profitability to “the continued commercial discipline influencing our risks, opportunities and contract selection”.
Company directors said the lower overall turnover figure in 2023 was due to the timing and completion of projects in Canada, partially offset by greater activity in Ireland and the UK.
But last year’s performance was still £150m higher than Murphy’s 2021 turnover of £1.27bn.
The overwhelming majority of turnover (£1.01bn of the group total) in 2023 came from civils work in the UK.
Higher profit and a wider margin enabled Murphy to pay out £16.9m in dividends, compared with £9.1m in 2022.
And this February (after the period covered in the latest accounts), the firm declared an interim dividend of £8.8m.
Murphy was ranked 11th in the CN100 2023 table of top contractors.
It improved its end-of-year net cash position in 2023 from £275.5m to £347.1m. This was partly due to a “strong focus on working capital management to ensure our needs are met and [that] the group can deliver its order book”, said Ledwidge.
The firm took on £15m of short-term bank loans repayable within 12 months, and it held the same amount in long-term bank debt.
Average monthly headcount in 2023 totalled 3,855, up from 3,688 in 2022. Spending on training, learning and development grew by 35 per cent to £3.1m, according to group people and communications director Dawn Moore.
The order book grew by 31 per cent to end the year at £3.31bn, driven by wins such as the £1.34bn Lower Thames Crossing tunnelling contract in December (as part of a joint venture with Bouygues).
Engineering director Richard Sutherden also highlighted the completion of tunnelling works for National Grid in the London Power Tunnels Phase 2 project to replace cable infrastructure.
In 2023, the firm continued 132KV cable diversion works to connect Hinkley Point C to the wider electricity transmission network. This project is scheduled to be commissioned next month.
Murphy also delivered Beaulieu Park, the first railway station to be built on the Great Eastern Main Line for more than 100 years.
The group reported its Scope 3 greenhouse gas emissions for the first time in 2023, and chief executive John Murphy said it invested almost £40m in “green plant and equipment”.
The target is to invest £75m in green plant, equipment and vehicles by the time the group marks its 75th anniversary in 2026.
In April this year, the group arranged a £25m, three-year credit facility with NatWest subsidiary Lombard. The firm said this will help to ensure it “can continue to invest in new green plant in the UK”.
Murphy added: “By 2025, 100 per cent of our electricity will come from renewable sources.”
He expressed his “confidence” regarding continued growth in traditional civils markets, as well as newer sectors such as energy security and new infrastructure investment.
UK managing director Nick Fletcher said: “Murphy sees a positive outlook for UK construction in 2024, and in particular for our core competencies in the infrastructure sector.
“The government’s National Infrastructure and Construction Pipeline indicates a further £700bn of much-needed investment in infrastructure projects over the next 10 years, with transport, energy and water creating multiple opportunities.”
