Analysis of the financial performance of the UK’s biggest construction and housebuilding companies shows that Balfour Beatty has remained in pole position as the largest UK construction firm. The builder leads the UK market ahead of companies such as Barratt Developments (7th) and Carillion (6th).

‘The European Powers of Construction 2007,’ an annual report from business advisory firm Deloitte, looks at construction company performance. The study ranks the largest 100 European builders by revenue, and examines the hurdles construction companies face in an increasingly challenging building environment.

While this year’s ranking does not have any UK companies in the top ten, UK firms dominate the top 100 survey, accounting for 33 of the top 100 places. The UK has over 250,000 companies active in the industry, employing 2.2m people and accounting for 6.64% of UK GDP.

The UK ranking is expected to change significantly next year following the takeover of Wilson Bowden by Barratt Developments and the merger of Taylor Woodrow and George Wimpey – displacing Persimmon’s position as the largest housebuilder. The combined revenues of Taylor Wimpey are expected to place it within the top ten European firms. Further the recent acquisition of Alfred McAlpine will continue to push Carillion up the league table, as will Morgan Sindall following its acquisition of some of Amec’s activities.

Nigel Shilton partner at Deloitte said: “The list of the largest construction companies in the UK, and indeed the list of the largest firms in Europe are becoming increasingly populated by the house builders and will continue to do so given the widespread consolidation that is taking place in the sector.”

Deloitte predict further consolidation in the UK construction industry. Commenting Nigel Shilton said: “Despite recent mergers, the UK construction industry remains very fragmented. Most of the companies in the industry are small and domestically-owned, with localised operations. We expect to see further M&A activity over the next few years in response to an anticipated cooling of the housing market.”

However, Deloitte predict the outlook for the industry remains positive. Jack Kelly, infrastructure partner comments: “The main driver for construction output continues to be the Government’s commitment to improvements in transport infrastructure, healthcare, education and social housing. The multi-billion pound programme of construction and infrastructure works for the Olympics, the Crossrail link and the M25 will further contribute to output.”

Jack Kelly notes that challenges remain for the housebuilding sector: “Due to inflationary pressures and rising interest rates, growth in the house building sector is expected to slow further in the near future. However, given projected UK housing shortages, the longer term outlook remains positive.”

Download our PDF that outlines the top 10 UK construction firms (170KB, PDF)

Ends

Notes to editors
The full report, ‘European Powers of Construction 2007’ is available to download from www.deloitte.co.uk/epoc2007. Hard copies are available on request.

About Deloitte
Deloitte has the largest specialist real estate division in the UK and brings together professionals from assurance, tax, corporate finance, transaction due diligence and other support, forensic and reorganisation services. We have a proven record of providing quality advice founded on longstanding experience of working on the most complex transactions in the sector.

Real estate is one of Deloitte’s fastest growing industry groups. Our clients include many of the industry’s largest real estate investors, construction companies, fund managers, investment advisors, developers, property management and leasing companies, REITs, mortgage brokers and bankers, pension funds, syndicates and insurance companies.

In this press release references to Deloitte are references to Deloitte & Touche LLP which is among the country’s leading professional services firms, providing audit, tax, consulting and corporate finance services. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein whose member firms are separate and independent legal entities.  Neither DTT nor any of its member firms has any liability for each other’s omissions.  Services are provided by member firms or their subsidiaries and not by DTT.  Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.  The information contained in this press release is correct at the time of going to press.