CN Specialists Index 2024: top 10 M&E contractors

The UK’s top 10 mechanical and electrical (M&E) firms grew their collective revenue by a fifth in their latest accounts, according to this year’s index.

The sector’s biggest firms posted combined revenue of £3.68bn in their most recent accounts. This was a 21 per cent increase on the previous year’s figure of £3.04bn, and the second-highest in this year’s Specialist Index behind ground engineering (26 per cent).

The recovery in pre-tax profit was even better with 474 per cent growth in this year’s index. The combined £51.6m marked a collective return to profitability compared to last year’s £13.8m loss.

Eight of the top 10 contractors by revenue saw an improvement in their pre-tax profit figures. Dalkia retained its position as the largest M&E firm in the UK with a 23 per cent turnover hike to £871.6m in its latest accounts, and Gratte Brothers shot into the top 10 with a 79 per cent rise in revenue to £222.7m.

Only Enerveo and Briggs & Forrester, in sixth and ninth place, reported drops in income in their latest figures. Second-placed NG Bailey turned a £25m loss into a £10.7m profit. Skanska Rashleigh Weatherfoil in fifth also moved out of the red, making an £18.2m profit after a £300,000 loss.

The costs M&E firms charge rose by 7 per cent in the year to the second quarter of 2024, according to a survey by the Southern Construction Framework. “Many M&E companies are now pricing projects in such a way to ensure that their businesses remain sustainable and that they will be here for the foreseeable future,” the procurement body says. “Alongside fewer market participants, the view from many M&E contractors is there is enough work in the market. Technology and design quality has gone up, commonly requiring larger teams. Meanwhile, the jump in data centres and associated work has helped firms spread risk by providing a new sector in which they can operate.

“All of these factors are boosting workloads and confidence, allowing M&E firms to set higher prices if and when they choose to tender.”

Fourth-placed SES saw its revenue rise by 73 per cent to just under £300m in its latest accounts. Executive managing director Rob Clifford says 2023 was a “very strong year” that included work on parent company Wates’ largest ever contract, a 12GWh-capacity battery factory in Sunderland. “Over the past 12-18 months we have seen significant opportunities in both infrastructure and renewable energy, bolstering the industry and providing a steady stream of high-value contracts,” he adds. “Many lead contractors have also started favouring more integrated approaches, giving M&E firms greater involvement earlier in projects.”

Clifford predicts “a number of exciting opportunities” ahead, including on digital infrastructure and building performance. “The most pressing challenge we see is the persistent skills shortage and lack of labour, which could potentially hinder growth and project delivery,” he says.

NG Bailey posted a 13 per cent jump in revenue in its latest accounts, nudging it above £600m. Chief executive Jonathan Stockton says the impact of the pandemic and cost inflation on fixed-price jobs is “coming to an end”. “Nevertheless, the sector remains extremely challenging and therefore being selective with contracts is key,” he adds. “We have focused on growing our pipeline of work in recession-resilient markets with high barriers to entry, such as defence, nuclear, healthcare, airports, universities and rail.”

UK’S TOP 10 M&E CONTRACTORS

Notes: Dalkia Awaiting ex-Imtech accounts for 2023. SES Wates subsidiary.