‘Not going to make money this year’: Hutchies’ boss dire warning
The boss of Australia’s largest privately owned building company says his firm won’t make any money this year, as he was forced to auction off a developer’s home to recover millions owed to him.
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The boss of Australia’s largest privately owned building company says his firm won’t make any money this year, as he was forced to auction off a developer’s home to recover millions owed to him.
Scott Hutchinson of Hutchinson Builders said he had “multiple” projects that were now costing them money to be on site to complete construction.
While he was confident his firm would survive given the strength of their $388m balance sheet, he said no money would be made this year.
“It’s bad at the moment, I’ve never seen it like this. We’ll be right, we’ve got a big balance sheet, but we’re not going to make money this year I don’t think.”
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This as Mr Hutchinson put the riverfront home of Teneriffe developer David Blanck to auction Saturday activating a claim on the property his firm has as financier of a failed $500m Nerang Street Pty development project on the Gold Coast.
“To get the (deal) across the line, at the last minute he threw his house in,” Mr Hutchinson said of Hutchies’ claim on the property. “But it doesn’t come near what we’re owed. It was a very bad project.”
“He personally guaranteed. We’re selling it to recoup possibly a quarter of what we’re owed. We put money into that project. We weren’t just a builder, we helped finance it. We’re getting our money back as a financier.”
Ray White New Farm agent Matt Lancashire took the property to auction in front of a crowd of 127 people. “We’ve had over 100 inspections. We’ve had enquiries from interstate, Sydney, Melbourne in particular, overseas – Hong Kong, London and all through Asia, so it’s been a really good result to have over 11 registered bidders. A sale price of $6.55m is a fabulous result, not only for the building but the Brisbane prestige market.”
Mr Blanck had bought the entire ground floor riverfront apartment for $3.7m a decade ago.
Nerang St Pty is one of four firms linked to Mr Blanck that went under, liquidator William Roland Robson of Robson Cotter Insolvency Group confirmed, with Hutchinson believed to be owed about $21m from the Nerang deal.
Asked how many more such big hits his firm could take, Mr Hutchinson said “we can churn through a bit, we don’t want to. It takes a lot of capital to keep a construction business running, so we don’t want any (more) of those.”
“It’s a terrible game, it’s horrible. You’re dealing with such big numbers and such small margins, it doesn’t take much to go wrong. You get a crazy boom like this, it’s very hard. There’ll not be many (builders) left at the end, but we’ll be there.”
He said fixed pricing was killing projects and margins “very quickly”.
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“You can’t really price for something that hasn’t happened yet and it moves pretty quickly.”
Mr Robson warned there were many more companies that would hit the wall, given the domino effect collapses had across the economy.
“This is just unfortunately the industry as it is right now,” he said. “A lot of these companies are not going to survive what they’re facing, with exorbitant pricing, increased labour shortages, the cost of labour and delays in the production of materials and obtaining materials.”
He said in many circumstances directors these days signed personal guarantees to seal deals, with even some hardware stores now requiring personal guarantees.
“A lot of organisations in construction and a number of other industries are forcing shareholders to sign as well for this exact reason.”
The couple that won the auction of Mr Blanck’s home – who previously lived in the suburb – were thrilled to seal the deal over the ground floor apartment, saying it was their chance to get back into a suburb they loved.
“We always intended to find our way back here. We’ve got dogs so we were keen to find a ground floor. We’ve lived here before and we know the value of the whole lifestyle package.”
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