{"id":533042,"date":"2025-12-01T12:00:11","date_gmt":"2025-12-01T12:00:11","guid":{"rendered":"https:\/\/www.constructionnews.co.uk\/?p=533042"},"modified":"2025-11-28T16:43:03","modified_gmt":"2025-11-28T16:43:03","slug":"cn-specialists-index-2025","status":"publish","type":"post","link":"https:\/\/www.constructionnews.co.uk\/financial\/cn-specialists-index-2025-01-12-2025\/","title":{"rendered":"CN Specialists Index 2025"},"content":{"rendered":"

Notwithstanding persistent industry pressures, the latest CN Specialists Index shows signs that many firms have become more adept at protecting their revenues and margins. The total turnover for the 80 companies in this year\u2019s line-up climbed to \u00a314.38bn, up \u00a31.1bn (8 per cent) on last year\u2019s index, while aggregate pre-tax profit surged by more than 50 per cent to \u00a3625m.<\/p>\n

In 2024 \u2013 the period covered by most of the business accounts in the 2025 tables \u2013 it was \u201cquite difficult [for specialists] in terms of the backdrop, with housebuilding in a trough\u201d, says Rebecca Larkin, senior economist at the Construction Products Association (CPA). \u201cSo it was actually really encouraging to see that the specialists had dealt with that well, improving their margins, improving profits and, in most cases, improving turnover as well.\u201d<\/p>\n

The top 10 mechanical and electrical (M&E) firms led the way on revenue \u2013 their combined \u00a34.3bn accounted for nearly a third of the total for all specialists. The 17 per cent turnover rise among M&E companies was the joint-highest increase of all the specialist categories, alongside scaffolding.<\/p>\n

Fit-out also excelled, with turnover climbing 14 per cent to \u00a32.48bn, reflecting a sustained appetite for energy-efficient refurbishments and new grade-A office projects. These are \u201cbetter-spec, higher-quality fit-outs\u201d where \u201cthe sustainability side is non-negotiable\u201d, explains Iain McIlwee, chief executive of representative body the Finishes and Interiors Sector (FIS). He says members are seeing \u201cserious attention paid to things that have always been on the backburner, like reusing products\u201d.<\/p>\n

Scaffolding\u2019s 19 per cent turnover growth propelled the sector to a total of \u00a31.34bn. However, demolition saw only a 0.8 per cent rise, while ground engineering and concrete contracted slightly due to delayed infrastructure programmes and the weak housing market.<\/p>\n

Steel suffered a second successive annual drop in demand in 2024, says Jonathan Clemens, chief executive of the British Constructional Steelwork Association (BCSA). He cites persistently high labour and energy costs, and adds that \u201conerous contract conditions\u201d also affected BCSA members. \u201cThis has resulted is a steeper decline in profits than the volume reductions, raising a cause for concern in terms of the overall robustness of the supply chain,\u201d he says.<\/p>\n

Steel profits fell by 42 per cent \u2013 the second-worst drop behind demolition (64 per cent).<\/p>\n

Fit-out topped the chart, with profits more than doubling to \u00a3161.9m and the median margin expanding to 2.8 per cent.<\/p>\n

Overall, the median margin across this year\u2019s index rose from 2.9 per cent to 4.4 per cent, and average margin from 3.7 per cent to 4.9 per cent. The figures suggest most of
\nthe top firms in the indices are successfully adjusting to a new normal in which bidding caution and tighter cost control have become as important as chasing headline turnover.<\/p>\n

Profit margins rose in most sectors, with scaffolding out in front with a 10.5 per cent median margin. Larkin says the focus on margin preservation \u201cseems to have paid off\u201d, but it\u2019s not a uniform picture \u2013 demolition\u2019s median margin shrank from 3.2 per cent to 2.1 per cent, for instance, and the top 10 steel firms\u2019 combined median margin narrowed.<\/p>\n

Larkin notes material costs were less of a problem in 2024, with prices \u201crelatively subdued\u201d. She says: \u201cThe cost environment [last year] was definitely better, but there were lingering effects of past inflation. But thinking about where material prices were [before the inflationary spike of 2020-22], they\u2019re still elevated.\u201d<\/p>\n

As mentioned by the BCSA\u2019s Clemens, labour cost pressures remained a persistent challenge and could yet affect specialists\u2019 bottom lines in their next accounts. Employers\u2019 national insurance contributions \u2013 which rose in April this year \u2013 \u201cmay have some impact on margins to come\u201d, Larkin adds. And even though few construction workers earn the national living wage (which also increased in April), \u201cit has impacts on the next pay grades up [\u2026] Workers want that difference from the national living wage to be maintained.\u201d<\/p>\n

Looking ahead, Larkin says specialists would do well to maintain their focus on margin preservation and improvement. She also observes that spare manufacturing capacity is now evident, which could affect future pricing trends. Product manufacturers can raise output when demand increases, \u201cbut inevitably, there is sometimes some catch-up to be played, which could have an impact on prices\u201d.<\/p>\n

Larkin thinks the repercussions of tier one contractor ISG\u2019s collapse in September 2024 \u2013 which has already affected some specialists \u2013 will continue to ripple out. Other analysts and industry insiders also believe planning delays caused by the continuing bottleneck in the Building Safety Regulator\u2019s gateway two higher-risk building (HRB) approvals process are likely to affect turnover and profit figures.<\/p>\n

\u201cConfidence in the residential market has been dented with the issues around the new building safety regulations,\u201d says Philip Beausang, managing director of concrete specialist Byrne Bros, commenting on the regulatory regime that was introduced in October 2023. \u201cProjects are being delayed and investor confidence is low; everyone is feeling this at the moment.\u201d<\/p>\n

From the fit-out sector\u2019s perspective, the FIS\u2019s McIlwee sees gateway two-related delays creating \u201cmore [financial] impacts\u201d on specialists. And Larkin warns of fewer HRB projects to work on \u201cbecause there is this environment of uncertainty [\u2026] So as current projects end, there\u2019s nothing to really get that cashflow coming through.\u201d As such, she cautions: \u201cThere is still more insolvency risk to come later this year.\u201d<\/p>\n

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The top 10 companies in:<\/h3>\n