An Aberdeenshire housebuilding and construction group has declared it has “weathered the storm” after reporting a dip in profits in its most recent financial year.

Bancon Group reported an operating profit of £3.8 million for the year to the end of March 2024, down from £4.6m, during a “challenging” year for the industry amid high inflation and interest rates and an "unpredictable" mortgage market. Turnover tumbled by 26% to £97.7m.

However, Bancon signalled that it has experienced a “significant upturn” in the current financial year, during which it expects to report an increase in profit and turnover as market conditions begin to improve.

“In what was a challenging year for our industry, we have weathered the storm to deliver a resilient performance with positive results,” said Andrew Tweedie, the group’s chief financial officer. “Our strong and balanced portfolio of business streams combined with a focus on control of margins and overheads have enabled us to remain profitable in spite of reduced sales across our business.

“With some of the uncertainty in the market having settled, we are now seeing a marked uplift in activity and trading performance across all the sectors in which we operate. We look forward to delivering a strong and further improved result come our year-end in March 2025.”

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Bancon highlighted the impact of “cumulative headwinds” on consumer confidence as the firm’s dominant homes division saw turnover fall to £65.6m from £68.4m, amid a reduction in sales of new-build homes. However, it reported increased activity in the provision of affordable homes, including at its flagship development at Cloverhill, where 258 of the planned 536 homes were handed over to Aberdeen City Council.

Bancon also reported that it acquired three new sites to build homes across north-east and central Scotland.

There was a 38% rise in operating profit at Bancon Construction last year despite turnover dropping to £21m from £35.5m. The firm said this reflected a decision to move its focus from more “volatile” main contracting work to activity that offers better margins and is more secure, with an “acceptable risk profile”. Bancon said this has led to “successful” partnerships local authorities and housing associations which are focused on delivering affordable housing and retrofitting existing council properties.

The group’s timberframe business was said to have seen margins hold up well, having booked a profit of £1.5m compared with £2.3m last time. Turnover at Deeside Timberframe tumbled to £25m to £37.1m as activity levels dropped by 33%; according to Bancon, UK housebuilders typically saw volume reductions of between 30% and 35% in the period covered by the accounts.

Bob McAlpine, chairman of Bancon Group, said: “These robust results reflect the underlying strength of our business, the spread of risk and strong position in the markets in which we operate. With market conditions improving, a strong team in place, and a marked uplift in activity levels this year we are well-placed to deliver our growth ambitions and capitalise on the prospects available to us going forward."