Profit slips at Story Contracting as inflation bites
Story Contracting has blamed a fall in profit on soaring inflation and problems in its supply chain.
The rail specialist penned a pre-tax profit of £9m for the year ending 31 March 2022, compared with £11.3m the previous year. This was despite turnover rising from £156m to £177m.
High inflation and global supply chain struggles meant the firm “began to suffer” towards the end of the financial year, according to the group’s board.
Despite a strong start, the 12 months to March 2022 had been “a challenging year for the business”, Story added in a strategic report accompanying its accounts.
The firm has strived to diversify its business to make it “more resilient to [fluctuating] rail spend” in the future, and remains focused on work in the rail sector, it said.
As part of the diversification effort, the business split its plant division from its parent company and moved it to Story Plant Ltd, its more plant-focused arm. Splitting them would give Story Plant and Story Contracting “greater strategic focus”, the board said.
Despite the difficulties, Story Contacting saw its revenue jump 14 per cent on the back of “increased volumes” of work from Network Rail in England and several large projects in Scotland.
Rising inflation, “potential funding restrictions” and rail-sector strikes are all expected to restrict Story’s margin in its current financial year, which ends at the end of March.
Although the strikes, which started in June 2022, “didn’t have a direct impact on the business”, they have caused projects to be delayed “due to uncertainties and other priorities within Network Rail”.
However, the company added that it was expecting to report a turnover of more than £210m for 2022/23, given the progress made in diversifying the business.
Next month, Story’s long-time chief executive, Jason Butterworth, will step down to be replaced by Andy Joy, who joined the business from Amey in November 2021.