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Highlights
- Recent reports have indicated that construction projects in the UK have taken a hit amid ongoing economic challenges.
- This negative impact has threatened the delivery of new offices, houses, and infrastructure plans.
- Development activity in construction is expected to flatline as the sector faces several challenges amid the worsening macro environment.
Amid the rising inflationary pressures, tighter credit, labour shortages and high cost of raw materials, construction projects in the UK have taken a hit. Recent reports have indicated that while the government has been putting in efforts to grow the economy, the construction sector slowdown has been offsetting those efforts amid the existing economic challenges.
On Thursday, a study released by the Royal Institution of Chartered Surveyors (RICS) and Glenigan revealed the dampening influence of the downward-spiralling economy on the construction sector. This negative impact has threatened the delivery of new offices, houses, and infrastructure plans.
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The RICS survey involving over 1,600 members revealed the weakening desire for new projects among developers in the UK. Despite the darkening outlook, construction specialists have reported a strong slowdown in workload revival following the Covid-19 pandemic.
According to the chief economist of RICS, Simon Rubinsohn, the summer of 2020 saw a swift increase in development activity with the reopening of the building sites. However, it would probably flatline in the near future as the sector faces several challenges amid the worsening macro environment.
Approximately two-thirds of the national brick demand comes from housebuilding activity, and a slowdown in construction has led to the downgrading of the businesses that offer building materials.
Amid this, Kalkine Media® explores three construction stocks and their performance.
Balfour Beatty plc (LON: BBY)
The YTD (year to date) and one-year returns of the leading infrastructure group providing construction services and investment, Balfour Beatty plc, stand at 14.12% and 17.07%, respectively, as of Thursday. As the market opened on 3 November at 8:00 AM (GMT), BBY shares were down by 1.74%, trading at GBX 293.80. The FTSE250-listed business has a market capitalisation of £1,780.45 million at the time of writing, and its P/E ratio stands at 10.28. With an EPS (earning per share) of 0.21, the company currently has a turnover (on book) of £13,152.60.
Galliford Try plc (LON: GFRD)
The YTD and one-year returns of one of the UK’s top construction businesses, Galliford Try plc, stand at -6.45% and -17.31%, respectively, as of Thursday. On 3 November at 8:00 AM (GMT), GFRD shares were trading at GBX 168.20. The business has a market capitalisation of £185.28 million at the time of writing, and its P/E ratio stands at 33.23. The company currently has an EPS of 0.06.
CRH plc (LON: CRH)
The YTD and one-year returns of the global group of differentiated building materials firms, CRH plc, stand at -20.94% and -14.58%, respectively, as of Thursday. As the market opened on 3 November at 8:00 AM (GMT), CRH shares were down by 1.88%, trading at GBX 3,025.50. The FTSE100-listed business has a market capitalisation of £23,096.93 million at the time of writing, and its P/E ratio stands at 10.56. With an EPS of 3.29, the company currently has a turnover (on book) of £1,375,011.87.
