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Galliford Try builds back into black

Construction group reverses pre-tax and operating losses and hits margin goal
September 16, 2021
  • Final dividend of 3.5p per share
  • Key target of 2 per cent operating margin hit

Billions in government spending and high demand have shored up the construction industry in the past year. This came at the same time as global and UK trade hit rough seas through the pandemic and Brexit. But when announcing its full-year numbers for the 12 months to 30 June, Galliford Try (GFRD) management said it had seen “no significant impact” to trading or margin from inflation or shortages. The company has lifted its operating margin goal from 2 per cent to 3 per cent after hitting that target a year early. 

Its building division led the way on sales and registered a £16m operating profit before amortisation, compared with a loss of over £50m last year. The smaller civil engineering division hit an operating profit of £6m on lower sales, but saw a one-third tick-up in orders, to £1.3bn. 

Galliford Try is doing better partly thanks to the government’s Covid-19 stimulus, said chief executive Bill Hocking. He also pointed to spending “in response to Brexit”, aimed at “ensuring [the UK] has the infrastructure to support... productivity”. New contracts in the building division are tied to English and Scottish government spending, including in the NHS, although the order book for the unit was down 11 per cent on the year before at £1.9bn.  

This was the first set of full-year numbers after the sale of the homebuilding division to Bovis Homes, now Vistry (VTY). Both companies have seen their share prices double or nearly double in the past year, while at its interim results earlier this month Vistry said it had fully recovered from a weak 2020. 

Consensus estimates compiled by FactSet see earnings per share climbing over a third next year to 13p. This government cash and higher margin looks to have put the company on a sounder footing. Move to hold. 

Last IC View: Sell, 94p, 16 Sep 2020

GALLIFORD TRY (GFRD)  
ORD PRICE:178pMARKET VALUE:£197m
TOUCH:177.3-178p12-MONTH HIGH:182pLOW: 70p
DIVIDEND YIELD:2.6%PE RATIO:19
NET ASSET VALUE:121p*NET CASH:£197m
Year to 30 JunTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20172.6671.053.186.0
20182.9314412177.0
20191.40-64.5-44.758.0
20201.12-34.6-29.4nil
20211.1311.49.504.7
% change+0.4---
Ex-div:11 Nov   
Payment:10 Dec   
*Includes intangible assets of £82.9m, or 75p a share