Rok

A drop-off in new building projects early in the year has hit profits at ‘the nation’s local builder’ Rok and prospects look distinctly mixed for some time to come.

Rok – which manages construction projects in the public and private sectors and retains hundreds of tradesmen around the country to provide building and property maintenance services for homeowners, small businesses, social housing organisations and insurers – saw sales slump by a third to £364.5m in the six months to June, with pre-tax profits almost halving to £6.0m. Hitting the figures hardest, according to chief executive Garvis Snook, was new build ‘falling off a cliff' last year, whilst this activity continued to stumble in this year's first quarter.

Looking ahead, Snook expects new build with councils ‘to even out over the rest of the year’ but adds that ‘industrial and commercial work halved and we don’t see it recovering for two or three years’. Further forward he says ‘we’re going to continue to focus on response maintenance and work for insurers’ and he expects more work in repairs and in social housing new build, but a cut in spending on new build for schools and healthcare.

That the board snipped a third off the interim dividend to 0.75p indicates its caution regarding the trading outlook and reflects a rise in net debt to £57m at the half year, though Snook explains that debt has 'already peaked earlier in the year’. Though Rok's firm order book of around £400m is backed up by some £2bn of expected revenues from framework agreements, a number of framework deals elsewhere in the market have been shelved, demonstrating present uncertainties in the group's markets.

Shares in Rok, forecast by independent broker Evolution to make £21m of profit before tax and 8.4p of earnings for the full year, have regained some ground after falling to a 16p five-year low, but should only attract the most ardent of sector fans in the short term. For now, there are perhaps better investments around.