THE facilities management giant owned by Lord Willie Haughey has hiked profits in its last financial year, driven by rapid growth in the US and a resurgence in its core UK retail market.
Glasgow-based City Facilities Management saw its operating profit more than double to £15.4 million in 2016, boosted by a 33 per cent rise in turnover to £617m.
The gains, revealed in accounts filed at Companies House last night, emerged as a survey by Grant Thornton revealed City is now Scotland’s biggest private sector employer, with a headcount of more than 12,000. Around 800 staff are based at City’s headquarters in the Gorbals area of Glasgow, where Lord Haughey grew up.
City’s performance came amid strong growth in the US, which produced its biggest leap in turnover and customer numbers, following the launch of the Florida-based US subsidiary last year. The division acquired Boston’s Baltic Trail Engineering, bringing it scale and service provision capability across the Atlantic.
Away from the US, City, which recently moved into continental Europe for the first time, highlighted new business and organic growth in Australia and South East Asia. And it said its core UK market saw recovery over the year, following “challenging times”.
Lord Haughey said: “A big part of our business is in retail, and retail have had their own challenges. That market has been challenged in the last two or three years, and during that period we have managed to grow. This year we have seen in continuing.”
Asked to elaborate on the challenges retailers has faced, Lord Haughey noted: “There was a big restraint on capital spend with the major retailers in the UK for a while until the market adjusted. But I think that adjustment has now kicked in and people are starting again to look at their growth plans.
“When you look at our accounts you will see a lot of our growth has come from abroad, but we are growing in the UK also. Austerity has affected retail more than anyone – the average basket spend is down. But I think people now have a wee bit more confidence about the economy and Brexit and are back to getting on with life, and buying what they have to buy.”
City gained its first ever foothold in mainland Europe with the acquisition of Lesprit of France earlier this year, with Lord Haughey previously indicating that the deal would provide a gateway for expansion into markets such as Spain, Portugal and Romania.
Lord Haughey, however, does not envisage making further acquisitions to facilitate growth in any of its key markets, which also include Australia and Asia.
Noting that City’s move into the US has exceeded expectations, he added that the plan for the business across the Atlantic is focused on achieving organic growth.
“For the next two years we have enough on the stocks to grow organically,” Lord Haughey said.
He highlighted the impact made last year by new customer wins and by City’s continual investment in management information technology, including a system for calculating life cycle maintenance costs on equipment such as refrigeration.
Lord Haughey added: “This is a big part of the success of the business now, because people see that the data we can provide in relation to costing on capital spend for equipment is invaluable. A huge part of our capital investment is in our systems.”
While Lord Haughey, who is a shareholder and former director of Celtic Football Club, was pleased with the firm’s performance, he said he draws his biggest satisfaction from the huge number of people City now employs. “We’re obviously with the way the company is going. Obviously there are challenging times out there, so to increase our turnover like that is quite remarkable.
“This year it has just continued. All the numbers are great, but the pleasing thing for me is to be officially recognised as the largest private sector in Scotland. That gives me a lot of pride.”
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