High costs and low confidence hit construction firms
Stuart Kilpatrick, CFO of Lords, emphasized that the primary issue for construction companies is a loss of confidence in the market. This uncertainty has led many individuals and investors to hold off on making decisions, stalling new projects and slowing economic momentum in the sector.
Lords calls for government action
Kilpatrick urged the government to simplify planning procedures and reduce financial pressures on businesses. He specifically highlighted the need to tackle rising employers’ national insurance, which has significantly increased operating costs for companies like Lords.
Broader challenges in the construction industry
The construction sector, which accounts for around seven percent of the UK’s GDP and supports over two million jobs, is currently facing the steepest cost increases in over three decades. Companies in this industry are battling the combined effects of high interest rates, inflation, and geopolitical tensions, particularly the ongoing Iran conflict, which has further strained market conditions.
Recent reports show that homebuilders such as Berkeley and Crest Nicholson are also under stress. Berkeley warned in a recent statement that urgent government action is needed to meet housing targets, while Crest Nicholson recorded a £35 million loss, attributed to higher interest costs and waning consumer demand. S&P Global’s Purchasing Managers’ Index revealed ongoing job cuts in the sector, especially in civil engineering, where performance has been the worst since the beginning of the pandemic. Prime Minister Andy Burnham has promised an ambitious council housing program, but the full details have yet to be outlined.
Lords' financial performance and future outlook
Lords’ revenue in the first half of the year fell slightly to £232 million, down from £232.8 million in the same period last year. While the firm saw some positive developments, including a 17.5 percent increase in digital division revenue and an eight percent rise in spares sales, these gains were not enough to offset the broader market downturn.
The company is not predicting a significant market rebound in the second half of 2026. Kilpatrick pointed out that there has been no meaningful improvement since the second half of last year, but he noted that Lords is making efforts to maintain its market share and keep costs as low as possible.
To adapt to the changing environment, Lords has restructured its plumbing and heating divisions, a move it anticipates will result in £1.5 million in savings. The company is focusing on positioning itself as strongly as possible for a potential market upturn, while continuing to navigate a difficult business climate.
Lords also projected full-year revenue between £475 million and £495 million, with adjusted pre-tax earnings in the range of £17 million to £18 million. However, the repairs, maintenance, and improvement (RMI) and building materials business, a key part of the company, saw a like-for-like decline of 4.9 percent in the first quarter, though this dropped slightly to 2.2 percent in the second quarter.