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News Release from: Euler Hermes UK | Subject: Quarterly survey
Edited by the Buildingtalk Editorial
Team on 05 June 2007
Construction records strongest growth
since 2004
Quarterly survey produced by Euler Hermes UK and NTC Economics shows strongest construction sector growth since 2004 with cash flow up 4.5% on a year earlier.
Having seen their profits decline on a quarter-on-quarter basis throughout 2006, UK construction firms reported a welcome return to growth of their profitability at the start of 2007 The Q1 Cash Flow and Profit Report (2007) from Euler Hermes UK, a company of Euler Hermes, subsidiary of AGF and member of Allianz, showed construction profits recovering strongly through the first three months of the new year
This article was originally published on Buildingtalk on 16 Feb 2007 at 8.00am (UK)
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An increase in profits was recorded for the first time since Q3 2005 with growth hitting its strongest since Q2 2004.
Rapid growth of activity and improved pricing power were both reported to have boosted construction sector profits in Q1 2007.
In addition to recording a strong recovery in their profits at the start of 2007, UK construction firms also reported an impressive year-on-year rise in their cash flow.
Free cash flow posted a 4.5% increase from a year earlier, the sharpest rise since Q3 2005 and a rate of growth above the whole economy average of 3.8%.
The pick-up in growth of cash flow at construction firms in Q1 2007 was largely attributed to strong expansion of sales and better management.
UK construction firms were also optimistic that their cash positions would continue to improve over the next twelve months.
Measured overall, companies forecast growth of free cash flow of 7.2% for the coming year, which represented the highest degree of confidence in the sector since Q1 2004.
Construction firms were also more optimistic regarding future cash flow than any of the other three sectors (services, manufacturing and distribution) covered by the survey.
A rise in the incidence of payment delays to UK construction firms was again recorded in Q1 2007, with the rate of increase sharp and broadly unchanged from the previous quarter.
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