Ship builder A&P Group has revealed a huge jump in annual profits but warned that its margins in the North East have suffered.
Turnover at the company, which has a shipyard at Wagonway Road in Hebburn, saw its turnover jump from £94.8m to £111.7m for the year ending March 31 2019. Meanwhile, operating profit at the company jumped from £2.8m to £3.5m.
The strong growth was largely fuelled by the company’s increased work on military projects.
However, A&P warned that, despite the strong results, its margins in the North East had fallen due to strong competition in the region.
Speaking in the firm’s financial accounts, CEO John Syvret said: “In the North East, core shop repair revenue was lower than the prior year, coupled with lower margin, reflecting the continued competitive nature of the market place.
“Whilst shop repair revenues in the smaller vessel size market increased, this was more than offset by a reduction in large scale ship repair and refits. Fabrication revenues improved but continued to track below expectation.”
To combat the more challenging market, A&P has split its North East operations into two separate businesses focused on ship repair and submarine manufacture.
“Margins from projects following this restructure have been very positive and the business is confident that efficiencies and profitability will improve in the current financial year,” added Mr Syvret.
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Both of the company’s sites in Hebburn and Falmouth are now working to secure more work in the supply chain of the renewable energy sector, the oil and gas sector, and heavy engineering industry. The firm is also looking to win more work as part of the UK’s National Shipbuilding Strategy.
During the period, A&P als increased its headcount from 535 to 578 members of staff. The biggest increase was in its production team, which grew by 35 members of staff to 498.
The increased headcount led to the firm’s total staffing costs increasing from £20.1m to £22.7m.
The firm’s directors received a total of £238,000 between them, up from £230,000 in 2018. The highest paid director received £168,000
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