ScotJCB has declared its current financial year has been “tougher than expected”, as new accounts reveal pre-tax profits fell amid challenging business conditions for the plant machinery specialist in 2023.

The Glasgow-based firm cited the impact of high interest rates and inflation, which make it more expensive for customers to proceed with projects, as profits dipped by 14.6% to £5.19 million in the year to December 31, though turnover leapt to £249.4m from £204.9m.

And the company, which sells new and used JCB equipment to the construction and agriculture sectors, said inflation and interest rates have continued to make their presence felt throughout 2024. Scot JCB, which is headed by joint managing directors Robin and Iain Bryant, expects to make a profit this year, but not at the level it recorded in 2023.

The directors lamented the continuing lack of major infrastructure projects and housebuilding activity in Scotland, as well as the impact of “horrendous” weather on the farming industry this year. They also flagged the knock-on effects on its business from “inflationary pressures” which have caused major projects to be “delayed due to re-costing”.

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However, they expressed hope that the pressure from inflation and interest rates is beginning to ease, following the first reduction in interest rates since before the pandemic struck in August.

Asked how he views the outlook for the year, Robin Bryant forecast that the firm will turnover around £200m in the current year, taking it back to its 2022 level, noting that inflationary pressures and higher interest rates have made it hard to “justify” investment.

He also highlighted that it has been a more challenging year for the company’s agriculture customers than in 2022 because of bad weather. But he said: “We are confident next year is going to be a stronger year again on the 'ag' side.”

ScotJCB generates around 70% of its revenue from supplying ground workers in the housebuilding sector, with the balance coming from agriculture.

It has diversified more into agriculture over recent years to compensate for any downturns in the core housebuilding market. “If there were more infrastructure projects going on in Scotland it would help, but there is just not a lot happening on that front,” Robyn Bryant said.

Iain Bryant, meanwhile, highlighted continuing skills shortages in Scotland, which Scot JCB said it was addressing by investing in apprenticeships. The company now has around 40 apprentices on its books, which Mr Bryant said makes it one of the biggest recruiters of trainee workers in Scotland.

Asked if the skills shortage could be addressed by loosening immigration rules, Robin Bryant said: “I think that is the only way you are going to get enough skilled workers in. But it is about apprenticeships and training.”

Iain Bryant said: “Apprenticeships is a biggie. As a percentage of our workforce, apprentices are very high compared to lots of people in this industry. That is the way. [Of our] 340 staff, 40 of them are apprentices. As a percentage, that is big. Every company needs to do more and get more people into the construction industry.”

Asked if the construction industry had any perception issues to overcome among prospective recruits, Robin Bryant said: “Potentially. It is also a big challenge to get more women into the industry. There is maybe that perception that it is dirty, hard work but that is not the reality. There are a lot of highly skilled, well-paid jobs in the construction industry.”

On whether higher interest rates would deter the firm from making acquisitions, Robin Bryant said: “It would today, but we are always discussing opportunities and looking. But certainly today it makes things harder to justify. We look for more organic growth.”

As thoughts in the business world focus increasingly on the Budget on October 30, Robin Bryant said “more help for businesses to invest” would be welcome, whether through tax incentives or discounts. He argues that this would help “get the economy moving again”.

“More help for apprentices as well,” added Iain Bryant. “Encourage firms to take on more apprentices, which then means more help for the colleges, if there is an increase in apprentices.”

The firm would also like the Scottish Government to make it easier for companies to build houses in Scotland.