Lawrence hits 3% margin

Lawrence, the specialist pipeline constructor, has hit margins of 3%, one of the two main targets set when Peter Hargreaves took over the reins as managing director in 2000.

The second strand of Hargreaves' three-year plan was to double turnover to £45m. Lawrence's latest results (12 months to 31 March 2003) show that the business has also hit this objective. The latest turnover of £48m (£64m - artificially high in the previous year as the result of a blip stemming from the effects of foot and mouth) generated a pre-tax profit of £1.5m (£1.0m).

"I set the challenge of getting to margins of 3% and we've done that," said Hargreaves. "I'm very pleased to get there as it puts you in the top 20% of UK construction companies. In our sector you have McNicholas [green] losing money and the big players running at 1.5% to 2%."

Hitting 3% margins has been particularly difficult when costs such as pensions and insurance have been roaring ahead. "We were hit by £250,000 of insurance increases that we couldn't recover," said Hargreaves.

"We thought insurance rates had stabilised at the end of last year, but then they went up again. It's the rises between tendering and contract award that you suffer from - a rise from 1.5% to 1.9% knocks your margin potential by 0.4% right away."

Transco's list of first tier contractors has been axed from eight to just four. Those still on board are: Entrepose, Murphy, Laing and the Nacap/Lawrence jv. As a general rule, orders under £10m come to Lawrence on its own, while work over £10m triggers the jv approach.