Chinese-owned John Holland suffers $200m reversal

Tough conditions in building have seen the construction giant sink to a loss after years of profits. But it has been winning new work.

Chinese-owned construction heavyweight John Holland plunged to a $60m loss last year.

Chinese-owned construction heavyweight John Holland plunged to a $60m loss last year as contracting markets remain tough and big-ticket loss-making projects that it is finishing off hit the results.

The company is among a slew of contractors to be hit by loss-making projects amid the impact of taking on fixed price contracts that proved costly as input costs soared in the wake of the pandemic.

But it has kept winning new work and is confident this year, even in the harsh climate for builders. Rival operation Roberts Co last Friday put its Victorian arm into administration, and the subcontracting industry was also hit by a series of construction company collapses.

John Holland blamed the mix of rising labour costs, labour shortages and supply chain issues, as well as tighter government budgets and extreme weather that slammed the eastern states.

The view of Melbourne city and the inner west from a flyover on the soon-to-be completed West Gate Tunnel Project at Footscray. Picture: Andrew Henshaw/NewsWire

A series of construction companies have either hit the wall or been forced to restructure their operations n the face of cost out blows.

John Holland dropped to a $60.89m loss before income tax in 2024 – a $200m-plus turnaround from the $194.72m profit it recorded in 2023. The company is owned by China Communications Construction Company and its loss after tax came in $34.34m.

The contractor was hit by higher costs on the third stage of the Gold Coast’s light rail line, and a future fourth stage was among 22 big projects cut from on the Infrastructure Australia Priority List released this year.

It also faced difficulties and delays on the Melbourne Metro Tunnel, where it is working along with the listed Lendlease and French company Bouygues, as part of the Cross Yarra Partnership building the twin tunnels and five stations.

The company was also hit by management change, as construction veteran Joe Barr resigned last October after an eight-year stint. John Holland’s executive general manager of major projects, Mark Davies, also left. A former John Holland CEO, Glenn Palin, who retired in 2016, and became a non-executive director, stepped up as acting chief executive.

John Holland said it was a “difficult” year for the company, citing changing market conditions and the challenging construction environment. The group blamed rising costs, labour shortages and supply chain issues, government budget constraints and extreme weather, as well as “some project delivery issues impacting on the company’s financial performance for the year”.

But John Holland said its underlying business was strong and backed the delivery of projects due to its sound overall financial position. It had net assets of almost $800m and a cash balance of almost $1.7bn, a solid pipeline of projects being tendered and work in hand of $20.7bn at the end of December, a jump of just over $7bn in a year.

The company booked $14.5bn of new work, including both new awards and contract variations, last year. It won the most work in its history last year, including the Torrens to Darlington ($3.864bn), Yarra Trams Operations & Maintenance (O&M) ($3.5bn), Metro Trains Melbourne O&M (including an 18-month contract extension) ($683m), Inland Rail Beveridge to Albury ($473m), North West Treatment Hub ($470m), Inland Rail Illabo to Stockinbingal ($461m) and Belmont Desalination Plant ($461m) projects.

John Holland is also the preferred contractor on a number of prospects expected to be awarded in 2025 with a combined contract value of around $1.5bn.

The loss came despite John Holland’s revenue bumping up to $6.72bn in 2024 from $5.98bn a year earlier. The company said it reflected the impact of margin writedowns on a small number of projects and a considerable amount of profitless revenue in respect of some loss-making projects, “most significantly the West Gate Tunnel and Melbourne Metro Tunnel projects”.

This was offset by a solid and profitable overall financial performance from the balance of the company’s portfolio of projects, which it said exceeded budget. It was also hit by lower net interest income, mainly reflecting the impact of lower average cash balances.

John Holland is forecasting an improved result in 2025, subject to any unforeseen circumstances and market conditions

It was caught up in the Rozelle Parklands scandal in Sydney, where fragments of asbestos were discovered in mulch after site handover in December 2023.

John Holland said it completed the clean-up last April and the parklands were reopened. It said it had “fully co-operated” with the NSW EPA’s investigation into the contamination of mulch products, and continued to do so.

John Holland is also under investigation by the NSW Environment Protection Authority over a contaminated stockpile in the M7-M12 Interchange project in NSW. “There has been a comprehensive response to NSW EPA inquiries and the project is working with the NSW EPA on options to manage and dispose of the material,” it said.