Staff retention problems slash Haymills' operating profit

A difficulty in retaining staff and a few loss-making contracts in the South East and the Midlands have led to an 80% drop in operating profit for Haymills (Contractors), the construction arm of Haymills Group.

The group's figures for the 2001 financial year show a fall in profit to £200,000 compared to £1m last year. However, the construction arm posted a turnover rise of 18% to £97.6m while pre-tax profit soared to £2.9m compared to £1.1m last year.

Group chief executive Stephen Feery said that there had been some losses - totalling around £250,000 - from one unnamed project in the South East and some losses in the East Midlands; two-thirds of the division's regions such as East Anglia, the South West and its division in Gibraltar had proved successful.

Losses in the East Midlands meant that it was amalgamated under control of East Anglia. No staff or offices were affected.

London proved the greatest thorn in the side of the company with four regional directors leaving the group in the last two years. One project manager also left a London project halfway through as the company saw a 20% staff turnover last year; the group wants to reduce this to 15% by the end of this year.

"We are not chasing turnover," he said. "Turnover has doubled in the last year and I have a £110m profitable turnover target to reach next year, with a £150m target by 2005. I think we can achieve this."

This will be buoyed by the group's new drive towards being involved in at least one £10m - £15m project a year. The rest made up of between £1m - £3m contracts.

Starting the year with a £100m order book, Feery hopes to set a 1% net profit target this year with an increase to around 2% after that.