Sites across the Laing O’Rourke group are being served redundancy notices in company-wide cutbacks.
Just eight weeks ago Laing O’Rourke filed accounts showing a pre-tax loss of £288m for the year to 31st March 2023. It is now taking action to cut costs.
It is understood that the board wanted to take action sooner but decided to wait until after Christmas to swing the axe.
Financial analysts at Company Watch are sounding a warning about the company’s financial safety, having recently downgraded Laing O’Rourke from 14 to just 4 in its H-Score system (out of 100). Company Watch says that any company with a score of 25 or less falls into its warning area and is at serious risk of distress. (Only Tilbury Douglas has a lower H-Score than Laing O’Rourke among nthe Top 100 construction contractors – just 2.)
In its analysis of Laing O’Rourke’s 2023 accounts, Company Watch says: “The interest cover of -9.88 is alarming, indicating that the company is not generating sufficient earnings to cover its interest expenses.”
Laing O’Rourke directors clearly recognise they have to cut costs.
This year’s redundancies, on the back of 200 last year, include 60 at the Laing O’Rourke Centre of Excellence for Modern Construction (CEMC) in Steetley, Nottinghamshire, which the company describes as “the jewel in our crown”.
Human resources manager Jade White told staff yesterday that the company had to scale back the workforce to where it was three years ago “to match our order books which are where they are three years ago”
The 60 people losing their jobs at Steetley, which included casting staff, steel fixers, concrete finisher, are in addition to the 40-plus agency workers who have already been let go.
[We have asked Laing O’Rourke for further details of the redundancy programme and will update this report if we receive them.]
The cutbacks come despite Laing O’Rourke being able to boast record orders – it’s order books are pretty much full – but projects are being delayed. That is what is causing the pain. The future looks fine, but it first has to get through the present.
Company Watch describes its H-Score as a measure of a company’s financial health using published financial results and analysis of its financial position from a number of angles including profit management, working capital management, liquidity and how assets are funded. Not all companies in the warning area will fail, it says, but of those that do, the vast majority were in the warning area before they collapsed.
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