Last updated 15 February 2023
Hochtief (UK) Construction
Hochtief (UK) is the UK operation of the German construction and engineering giant, which is among the world’s top 10 contractors. The UK operation works mainly in the civil engineering arena on major structures, employs more than 200 people and turns over around £100 million a year and employs around 150 people. Hochtief UK also runs a Public Private Partnerships (PPP) business.
Financials
Turnover at Hochtief (UK) Construction broke the £100 million barrier in 2014 only to subsequently drop back but in the latest trading year got back to this level again with an increase to £99.4 million (2020: £82.4 million).
Profitability had been crushed by problems on a ‘small minority of projects’ but 2019 brought a return to profitability and Hochtief remains in the black, albeit at a reduced level. In the latest year, Hochtief UK made a pre-tax profit of £0.7 million (2020: £4.6 million).
To view the financials for Hochtief (UK) Construction Ltd, visit Companies House and use Company ID 02489026.
Operations
Operating out of headquarters in Swindon, Hochtief UK works predominantly on civil engineering works including road, rail, tunnelling, energy, bridges and structures, marine and some building work. Clients are typically in the public or regulated sectors and range from National Grid, Network Rail and Transport for London (TfL) to Highways England, London Underground, the High-Speed Rail Two programme (HS2) and the Welsh Assembly.
Hochtief UK works on major projects, such as the £377 million London Power Tunnel scheme for National Grid (Project ID: 18044305), and is laying cables for National Grid in the Snowdonia National Park (Project ID: 16013159).
Hochtief’s PPP division is also in a 50:50 joint venture with Laing O’Rourke, in the Transform Learning Partnership, which is a £350 million Building Schools for the Future concession to deliver a number of schools for Salford City Council (Project ID 15112827).
Hochtief UK is on a number of major long-term agreements. These include Highways England’s £5 billion SR13 Capital Investment framework (Project ID: 13307916), Network Rail’s £4 billion CP6 Western & Wales agreement (Project ID: 18295984) and Hampshire County Council’s £500 million Generation 4-3 Civil Engineering, Highways and Transportation Collaborative agreement (Project ID: 18418661).
Glenigan Data
In the 2022 calendar year, Glenigan’s data shows that Hochtief UK’s order book totalled £10.5 million (2021: £1 million). The group did not feature in Glenigan’s rankings of the industry’s Top 100 contractors.
Conclusion: Back in the black – just?
Revenue has recovered due to work on the London Power Tunnels project, and Hochtief has stayed in the black again. The group’s UK operation had been derailed by problems not all within the group’s own remit, but a strategy of working on a handful of major projects is risky and this is also behind the major fluctuations in revenue. Hammerson’s decision to freeze all building work has also had an impact as the German company was lined up, along with Graham, for a major £100 million infrastructure package on the £1.4 billion Brent Cross shopping centre development (Project ID: 18223434).
The order book had been bolstered by the London power tunnels projects and the group was one of three consortia bidding for the £1.7 billion Stonehenge project (Project ID: 93148284) but missed out on this award.
The group often works in joint venture with other major contractors such as Buckingham, Costain and VINCI and the London power tunnel work is being carried out in JV with J Murphy. This strategy mitigates the risk to a degree, and the average size of contract won by Hochtief UK in 2022 was £10.5 million (2021: £1.0 million).
Hochtief UK also has places on long term agreements, particularly in the highways sector. With orders falling, Hochtief UK had consistently cut costs with jobs shed from the workforce and this has continued despite a revival in orders.
After cuts of 7% in 2017, 12% in 2018, 20% in 2019 and 10% in 2020, the latest year brought a further reduction. In 2021, the average number of employees fell a further 8% to 142 people due to cuts in site staff (2020: 153 people). Wages had been cut by 23% in 2018, 18% reduction in 2019 and 9% tin the previous year. In 2021, the latest job cuts reduced the wage bill by another 7% to £8.1 million (2021: £8.7 million).
In the 2022 group report, the management anticipate ‘positive development’ from the UK in the coming year from the waste and water, and regionally in Scotland, Wales and Ireland although the Welsh government’s decision to scrap virtually all of its road-building programme will have some impact on those anticipated prospects.
Hochtief typically only takes on a handful of schemes at a time, so is not at risk of overstretching resources. Though reduced in the UK, Hochtief UK is part of one of the world’s largest construction groups with annual turnover of €19.1 billion in 2022 and has recourse to greater resources and funding if needed.
Despite reduced profits, cash at the bank and in hand in the UK strengthened to £17.6 million in 2022 (2020: £16.2 million) due to contributions from joint venture projects. The forward order book also rose to £371 million (2020: £227 million) and, as a contractor with the backing of a major global parent company, Hochtief UK is in a secure position although the focus on major projects seems likely to affect turnover in the future.
Winning Work With Hochtief (UK) Construction
Hochtief (UK) Construction is accredited to a number of industry bodies and standards, including the Considerate Constructors’ scheme and Constructionline. Hochtief attends Constructionline’s Meet The Buyer events and aims to build supply chain relationships that recognise the importance of total cost, service, quality and innovation.
Hochtief has worked with the Supply Chain Sustainability School and details can be found here. Details about the group’s own supply chain can be found here.
Prospective new suppliers to Hochtief are initially asked to make contact via the company’s website. Queries about the group’s supply chain and procurement can also be sent to: procurement@hochtief.co.uk
Key Hochtief procurement contacts include:
Bid success manager – Martyn Cox, tel: 01793-755555
Senior buyer – Dean Cobb, tel: 01793-755555