Hutchies’ profit edges higher in a ‘rubbish’ year but the worst may be over

One of Australia’s largest private construction companies has recorded a small annual profit but its chairman believes the ‘nightmare’ may be drawing to a close.

Hutchies chairman Scott Hutchinson said it’s been a rubbish year but conditions may have bottomed out. Picture: Glenn Hunt

The chairman of one of Australia’s largest private builders has described the 2024 financial year as “rubbish”, but said he believed conditions were slowly improving after a horror pandemic run coping with cost increases and labour shortages.

J. Hutchinson Pty Limited, referred to as Hutchies, recorded a $4.7m net profit in the 2024 fiscal year compared to $1.3m in the previous 12 months, according to a ­financial statement lodged with the Australian Securities & Investments Commission. It reported a profit of $21.2m in FY22 and $27.7m in FY21.

Over the last financial year, Hutchies’ construction revenue lifted to $3.3bn compared to $3.1bn in the previous 12 months.

Hutchies chairman Scott Hutchinson said he believed the 112-year-old family business was at the bottom of the cycle, although it continued to lose money through its construction arm, having to cope with a 40 per cent increase in costs and 50 per cent longer building times since the pandemic hit in 2020.

At the same time, there was a huge increase in construction demand, which meant the Brisbane-based company had to increase its workforce to just over 2000 to cover the labour shortage. “It’s been another rubbish year. We lost money out of construction but interest and rents and other things managed to put us in the black,” Mr Hutchinson said.

“But I think we’ve bottomed out. This is the last of our post-Covid nightmares. It’s improving and I think we’ll be in the black next year.”

Hutchies’ construction revenue lifted to $3.3bn in FY24 compared to $3.1bn in the previous 12 months.

The company has more than 150 current active projects, and on average each is valued about $41m. In the 2024 financial year, the apartment specialist was ranked 11th in the HIA-Colorbond Steel Housing 100 Report with 1745 dwelling starts, up 31 per cent on the 1332 recorded in 2022-23.

Hutchies has $343m of cash in the bank that Mr Hutchinson said allowed it to pay subcontractors, even when clients could not.

The fourth generation to run the family business, Mr Hutchinson said that, while the quality of Hutchies’ construction jobs had improved, the company was still recovering from “bad” projects taken on during the pandemic that were hit by construction cost rises and labour shortages.

He said it may sound counterintuitive but in construction when turnover went up, profit could go down because of fixed-price contracts. And he described the post-Covid cost rises as “bonkers”.

Many of the so-called bad projects were on the Gold Coast.

“We got rid of most of the high-rises down the Gold Coast – there’s only a couple left. We had 16 cranes down there for a while and we have three or four now,” Mr Hutchinson said.

“When there is too much money around everyone buys into the Gold Coast and when they want to sell them they don’t get their money back.

“What’s happening is that building prices are so high only projects on the very best sites where we can charge a premium are going ahead. You have to get $20,000-$30,000 a square metre in sales to make it stack up. ”

Mr Hutchinson said he expected the workbook to start slowing. “It’s getting a bit quieter but we feel it may be the lull before the storm with the Olympics,” he said. “Actually, I can’t tell you what’s happening with the Olympics. I think the new government will have to sort that one out.”

Hutchies declared a fully franked dividend of $253,764 to be split between Mr Hutchinson and his mother and father.

Mr Hutchinson said the dividend should be seen on the context of a $3.3bn turnover.

“That money is from an agreement about 30 years ago that I had with Mum and Dad in the ’90s,” he said.