North Midland Construction rides losses on two contracts

North Midland Construction achieve a record interim turnover of £110m in the first half of the year, but pre-tax profit was £500,000 down, at £2.4m.

Robert Moyle, chairman, said that organic growth of 24% accounted for turnover growth from the comparable figure of £87m in the first half of 2006.

“With the orderbook at record levels, momentum will be maintained in the second half of the year,” Moyle added.

NMC’s 18% fall in profit was the result of two loss-making contracts. One was completed last month, the other runs to the end of the year.

“The circumstances relating to these losses are isolated and have no bearing on the rest of the business,” said Moyle. The financial pain brought to the surface in the first half represent the anticipated full cost to completion based on current contract estimates, he added.

The performance of North Midland Building and Nomenca, two of the group’s subsidiaries, was strong, while the Highways division was in line with last year.

One of the problem contracts was in NMC’s Civil Engineering division and the other in Utilities. As a consequence,  civils suffered a cut-back in profitability while the group’s utilities operation went into the red.