Brexit is already delaying both private and public sector projects according to construction firm Galliford Try, which said companies are holding off on investment while the government is preoccupied with preparations for leaving the European Union.
In comments accompanying strong half-year results, the firm warned that a no-deal Brexit would cause “a potential severe decline in consumer confidence and economic activity in general”.
It predicted that a more controlled departure under the terms of a negotiated withdrawal agreement would be much more manageable and would have no “significant direct impact” on the business.
But chief executive Peter Truscott said that regardless of the outcome, uncertainty over the terms of Britain’s future relationship with the EU was already placing a drag on the sector.
“The government is distracted with other things and in the private sector some clients are just holding off the decision to commence until such time as they know what [Brexit] is all going to look like,” he said.
“It’s taking people longer to make those decisions to buy homes for instance. In construction, it’s anecdotal and it’s hard to be specific about individual clients but some of those public sector projects we’d expect to have started seem to have been delayed.
“Government departments are busy with other things and that has delayed getting started on some sites.”
The Financial Reporting Council, the UK’s accounting watchdog, has asked firms to flag up any impact they believe Brexit is likely to have on their businesses.
Truscott’s warning was among the few downsides to a strong half-year statement that sent the company’s shares up more than 7% to 771.53p.
Galliford Try, which registered a £45m charge last year when it had to take on part of the Aberdeen bypass road project from collapsed outsourcer Carillion, reported a 4% decline in first-half pretax profit to £53.8m.
It took another £26m charge on the Aberdeen project in the first half due to delays in works on a bridge over the River Don.
This was not linked to Carillion, although its former joint venture partner’s demise means that any extra costs are now shared with only one other partner, construction firm Balfour Beatty.
Excluding exceptional charges, almost all of which relate to the road project, the company reported a record pretax profit of £84.2m, while reducing its net debt by more than half, from £84.9m to £40.1m.
However the half-year dividend on offer to shareholders has been cut from 28p a share to 23p.
The group’s financial position has been helped by a £150m rights issue launched last year to help it fund growth while absorbing the financial burden it shouldered from Carillion’s failure.
Its Linden Homes division recorded a 10% fall in revenues to £392m, with profits down 5% to £76.8m, as it moved away from higher priced property in London to homes outside the capital with better margins.
Revenues in its partnerships and regeneration business surged by 27%, helping profits up 34% to £14.5m.
Truscott said this was partly thanks to cross-party political support for building more housing, resulting in increased activity which he expects to continue.
The high-revenue but low-margin construction business saw revenue fall by 13% to £718.4m, with operating profit 12% lower at £6.3m.