Hutchinson Builders posts $21.2m profit amid labour shortages and weather woes

The boss of Hutchinson Builders has opened up on another ‘sh-t year’, revealing the perfect storm sending so many construction firms broke.

• QBCC crackdown: 170 builders cancelled
• Inside story: Collapse of broken building companies
• Named: Qld’s latest high-profile collapses

The boss of the nation’s largest privately owned builder says the company has had another “s**t year” but is thankful the operation remains in the black.

Brisbane-based Hutchinson Builders reported a profit of $21.2m in the year to June 30 compared to $27.7m in the previous period.

The 110-year-old firm posted revenue of $2.66bn over the year, similar to that of the previous 12 months, according to accounts lodged with the Australian Securities and Investments Commission.

Hutchinson chairman Scott Hutchinson said that while the company had bucked the trend in the sector by posting a profit, razor thin margins were not sustainable.

“It was a rubbish result last year and it was a rubbish result this year,” Mr Hutchinson said. “We have not had a good year since 2017. What is killing us is the rain and the fact that we cannot get materials and labour. It is not sustainable and that is why so many of us are going broke.”

Hutchinson Builders chairman Scott Hutchinson has opened up on a difficult year for the company amid supply and labour shortages, and wet weather. Picture: Liam Kidston

Mr Hutchinson said the shareholders of the business, including his own family, took very little out of the business in terms of dividends. This year the company, which employs almost 1600 people, reported a fully franked dividend of only $197,241.

The challenging conditions come as the company beds in a new management team following the retirement of managing director Greg Quinn after 21 years.

Mr Quinn joined Hutchinson in 2001 as the first non-family member to be managing director, driving an increase in the company’s turnover from $130m to $2.7bn. He will remain on the board as a non-executive director.

Mr Quinn has been replaced as managing director by Russell Fryer, who has been with Hutchinson for two decades.

The building industry has been hit by a perfect storm of labour shortages and material price hikes in the past 12 months that has seen the demise of major builders including Probuild, Condev, Privium Homes, and Pivotal Homes.

Hutchinson was one of the firms this year caught up in the collapse of Nerang Street Pty Ltd, a development company behind a $500m masterplanned project on the Gold Coast. Secured creditors of Nerang St were owed about $43m, including $22m to Hutchinson Builder.

Hutchinson Builders reported a profit of $21.2m in the year to June 30 compared to $27.7m in the previous period. Picture: Kevin Farmer

Mr Hutchinson said that while there might be light at the end of the tunnel in the 2023/24 financial year, he expected more firms to collapse over the next 12 months.

He said cost blow outs on major projects driven by developers wanting the lowest prices were a major contributor to industry pain.

Earlier this year, Mr Hutchinson warned building firms were undercutting each other with “crazy prices,” a major factor in the collapse of Probuild in February.

Probuild’s demise shook the construction industry in 2022. Picture: Andrew Henshaw

He said Probuild’s long-delayed 443 Queen St project in Brisbane was a major contributor to that company’s failure as costs ran out of control.

Mr Hutchinson said his firm had bid for the project but realised it could not compete with Probuild on the price. “We came second on that job but Probuild were well under us (on price),” said Mr Hutchinson at the time.

“Costs ran out of control. Financiers are backing these projects without asking whether they have the balance sheet to complete the jobs.”

Hutchinson’s current projects in Brisbane include the $550m West Village in West End, the $275m North Quay office development, Herson Quarter and 360 Queen St.

Hirsch & Faigen have chosen Hutchinson to deliver its third Gold Coast residential project, the $200m Yves development on Mermaid Beach.

The builder recently completed the $69m 101 Moray office and retail development in the heart of South Melbourne and last year wrapped up work on the $200m three-tower residential development The Langston in Epping in Sydney’s western suburbs.