Aberdeenshire-based housebuilding and construction firm Bancon Group has reported a significant downturn in its financial performance, with a £35 million drop in turnover according to its latest accounts. However, it has also reported a significant upturn in trading performance in the current financial year.
The privately held company, which employs 250 staff across its three main divisions, experienced a revenue decline to £97.7 million for the fiscal year ending March 2024. This represents a 26% decrease from £132 million in 2023.
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Bancon Development Holdings Limited encompasses Bancon Homes, Bancon Construction, and Deeside Timberframe.
The company has attributed this downturn to a difficult year for the UK housing and construction industries, citing high inflation, rising mortgage and interest rates, along with uncertain mortgage availability. Pre-tax earnings dropped to £1.3 million from £1.8 million in the 2023 financial year.
Nevertheless, the firm anticipates a notable rise in both turnover and profits for the current year ending March 2025 as market conditions improve. Bancon reported that current home sales are over 50% higher than the previous year, and it has already established a robust order book for timberframe projects in 2025.
The confident forecasts come after Bancon Group reported “resilient” results for the previous year against a backdrop of high inflation, increased mortgage and interest rates and unpredictable mortgage availability.
During 2023 and into 2024, the group delivered operating profits of £3.8m, compared to £4.6m in the previous year, despite turnover falling by 26% from £132m to £97.7m in the period. Pre-tax profits of £1.3m were only slightly down on the £1.8m posted the year before.
Andrew Tweedie, Chief Financial Officer of Bancon Group said: “In what was a challenging year for our industry, we have weathered the storm to deliver a resilient performance with positive results. Our strong and balanced portfolio of business streams combined with a focus on control of margins and overheads have enabled us to remain profitable in spite of reduced sales across our business.
“With some of the uncertainty in the market having settled, we are now seeing a marked uplift in activity and trading performance across all the sectors in which we operate. We look forward to delivering a strong and further improved result come our year-end in March 2025.”
Turnover at Bancon Homes was down from £68.4m in 2023 to £65.6m for the year ended March 2024. The cumulative headwinds, which impacted on consumer confidence at the end of 2023, led to a reduction in sales of private new build homes. But the business was able to offset this decline with increased activity in the provision of affordable homes. A notable example of this is the flagship development at Cloverhill, where Bancon has handed over 258 of the 536 affordable homes, planned over a four-year period, to Aberdeen City Council.
Bancon Group is not alone in facing market headwinds. Other Scottish housebuilders have been noting declines in volume ranging from 30% to 35% during the period covered by the Bancon accounts.
Stewart Milne Group experienced the largest financial loss of £23.3 million and entered administration in January 2024, resulting in the immediate loss of 217 jobs.
Cruden reported a significant loss of £11.7 million, which led to restructuring and a reduction in their competitively tendered projects.
Springfield Properties, while not showing a large loss, reported a reduced pre-tax profit of £1.2 million in their interim results. However, they are showing signs of recovery and have implemented strategies to reduce debt and improve performance.
These cases highlight the challenges faced by Scottish housebuilders in the current economic climate, with factors such as high interest rates, reduced buyer confidence, and increased costs contributing to financial difficulties in the sector.
