Hutchinson’s after tax profit soars by almost 140 per cent but concerns linger about rising costs and Covid

Australia’s largest private builder saw profits more than double but Scott Hutchinson ‘isn’t rapt’ and would be happy for a bit of downturn in Australia’s building frenzy.

Australia’s largest private construction company has more than doubled its after-tax profit in the last financial year despite the economic impact of Covid-19 and rising costs.

J Hutchinson chairman Scott Hutchinson described the 2020-21 result of $27.265m, compared to the previous year of $11.492m, as “not too bad”.

“But I’m not rapt. We could have gone a lot better and Covid is just kicking in now with all the problems,” he said.

The company’s audited financial statement reported construction revenue was $2.67bn this financial year compared to $2.87bn in the previous 12 months, while gross profit rose to $70.6m compared to $51.4m in the previous 12 months.

Mr Hutchinson said the family company, that has projects such as the $260m office tower at 895 Ann St and the billion-dollar West Village redevelopment at West End, has never applied for JobKeeper.

This year may have looked better in the books but margins remain just over 1 per cent, which he said was “nothing to crow about”.

“We had a couple of bad jobs or the results would have been a lot better.

“We’re still not clear of them but we’re getting through them and we’re trying to keep volumes down. I know it sounds counter-intuitive but usually if your volumes are up your profits are way down. That’s what construction is,” Mr Hutchinson said.

“You don’t know which jobs are going to be hard and which ones aren’t because you’re usually dealing with new clients.”

Scott Hutchinson. Picture: Liam Kidston

Mr Hutchinson said despite construction costs coming in at $2.6bn, well under 2019-20 figure of $2.82bn, they remained a concern.

“We don’t have a volume problem. It’s the rising costs of subcontractors and taking on bad jobs with difficult clients,” he said.

“We are disappointing a lot of clients that we are not holding our prices for a long time. Subcontractors and suppliers are not holding their prices, so we can’t hold ours.”

Mr Hutchinson said much of the building industry had been in a profitless boom for the past five years.

“I hope there’s not going to be growth next year and we’d be happy with a bit of a downturn so that the pressure on suppliers and subcontractors comes off,” he said.

Mr Hutchinson said Covid was having an impact in Sydney and Melbourne, where building sites have been closed.

“If that was the situation in Queensland it would really frighten us,” he said.

“We don’t have that much work in Sydney, or Melbourne for that matter, although we do have some difficult jobs to finish off.”

Overall receipts from customers came in at $2.9bn compared to $3.28bn the previous 12 months.

A fully franked dividend of $220,233 was paid in 2020-21.