Richard Crookes drops to loss but says construction woes are over

Building company Richard Crookes Constructions says it is on a path to recovery after falling to a $6.8m loss in the last financial year.

A sculpture at the Sydney Modern, part of the extension of the Art Gallery of NSW.

Building company Richard Crookes Constructions says it is on a path to recovery after falling to a $6.8m loss in the last financial year.

Builders were hit by soaring input costs and rising wage demands but many were stuck on fixed-price contracts, squeezing margins and facing loss-making jobs.

But the private operation has since picked up work and is optimistic that the worst of the storm has passed – and it is growing its book of social infrastructure work and on large-scale industrial jobs.

Last year’s financial loss marked a turnaround from the company’s $7.1m profit in 2022 but it said that it was now on a sound footing. The company did not pay a dividend last year after paying $2m out in 2022.

In a sign of just how hard the industry fell, the company’s loss was the only one in the last 30 years. “I think it was the market conditions,” RCC managing director Jamie Crookes said.

The company had revenues of about $1.5bn, up from the previous year’s $1.34bn.

It is one of NSW’s largest builders with more than 850 staff and about 3000 subcontractors employed on its sites every day.

It built projects such as the Walsh Bay Arts Precinct Redevelopment and, recently, the Sydney Modern Project, extending the Art Gallery of NSW.

Mr Crookes said the company had 50 live projects with a total value of about $3.3bn and a diverse pipeline of work, with about 60 per cent in government-related social infrastructure projects.

Since the company’s troubles emerged mid-year – when it rejected there were concerns about the state of its business – it has picked up about $900m worth of projects across NSW and the ACT.

Mr Crookes said that projects signed in the wake of Covid-related input price escalations were maintaining their margins and setting the company up for future profitability. He said that 2024 would be a break-even year and there would be a return to profitability in 2025.

Mr Crookes said that problems in the initial period after the pandemic, of hyperinflation and escalation of prices in labour and materials, had now slowed.

“They have come back to more historical levels of escalation and inflation in the market, which is bringing certainty to the projects,” he said. While the effects had already gone on smaller sites, it had taken longer to wash through on larger projects.

The firm is a well-known residential builder and still has four apartment projects it is completing. It is still pricing multi-unit residential jobs but was doing so in a much more collaborative way, Mr Crookes said.

“We’re working closely with our clients through the process to identify risk and de-risk,” he said. There was also greater sharing of risks on projects like schools, infrastructure and hospitals.

The company is busy in aged care but Mr Crookes nominated industrial as the largest sector for the company. “That’s probably the strongest, where rental increases have probably offset construction costs,” he said.

“We’re not seeing any slowing of the demand for industrial.

“We’re seeing our clients building without tenants obviously with still a lot of confidence in the market.”

Mr Crookes acknowledged that some subcontractors needed support but said that there was now a lot more profitable work.