Spencer takes £14.5m hit on wood pellet handling job

Multi-engineering contractor Spencer Engineering Group has plunged into the red after suffering a £14.5m loss on a major materials handling project.

The Hull headquartered business did not identify the project after reporting a pre-tax loss of £9.8m in the year to March 2018.

But the problem project is believed to be a £65m scheme to design and build facilities for the handling, storage and rail-loading of wood pellets at the Port of Tyne.

It involved building three 36m high silos and 1,300m of enclosed conveyors.

This handling facility, which completed last September, supports the conversion of Lynemouth Power Station to biomass burning and represented the largest single contract Spencer Group has secured in the materials handling and storage sector.

As a result of the project running late Spencer suffered £4.5m of liquidated damages and incurred higher costs.

Revenue also took a major hit falling a third to £75m.

The setback comes after Spencer previously hailed a landmark 2017 with record profitability of £5.6m and a £275m pipeline of work.

Spencer founder and executive chairman Charlie Spencer said the group enters this financial year with £108m of secured work and a pipeline of £367m.

The group is now trading profitably with overall gross margins at levels previously seen on core contracts.

Despite the tough year the workforce remained around 315.

 

from Construction Enquirer http://www.constructionenquirer.com/2019/01/02/spencer-takes-14-5m-hit-on-wood-pellet-handling-job/

via Tumblr http://ndbasilica.tumblr.com/post/181638108189