Sisk reports profits of €85m as it plans diversification

Building group Sisk made €85 million in profits last year and the company plans to expand beyond its traditional business through acquisition.

Sisk, one of the Republic's biggest private companies, said yesterday that group turnover for 2005 grew 31.2 per cent to €1.5 billion, driven mainly by strong construction activity in Ireland and Britain.

Operating profits grew 55 per cent to €68.5 million. Earnings before tax more than doubled to €85.4 million.

Executive chairman of construction, Bernard O'Connell, told The Irish Times that the sale of properties and interest earnings boosted pretax profits during the year.

Its Irish building business contributed more than €1 billion to turnover, while UK operations generated revenues of €380 million.

Sisk believes that its British business has achieved the scale it needs to get involved in large scale projects in the UK.

The group's statement said that its balance sheet was strong, with low levels of debt and good interest cover.

It also stated that it left Sisk well positioned to grow through acquisition and other opportunities.

This year the group took the first steps towards diversifying its business by buying two healthcare equipment distribution companies, MED Surgical and Cardiac Services, for undisclosed sums.

The deals are part of a strategy to broaden its base. Liam Nagle, executive chairman, trading, healthcare and investment, said the decision to diversify reflected the group's strength, but was not an indication that it believed that the building boom here had peaked.

"We're trying to balance the risk and the profile of the business," he said. Mr O'Connell said that the group aimed to grow all its operations.

"We are continuing to do two things," he said. "Invest in our core businesses and get more balance in its overall profile."

Mr Nagle explained that Sisk chose healthcare because it the growing population, and the fact that it is ageing, means that the sector will continue growing.

The group intends to continue buying new businesses, but does not have anything on its radar at the moment.

Mr O'Connell said yesterday that it does not intend limiting itself to healthcare, and would take advantage of any good opportunities.

Sisk is active in road building and other infrastructure projects, most of which feature State funding. It is involved in consortiums that are bidding for the contract to upgrade the M50 motorway around Dublin and the new prison at Thornton Hall, also in Dublin.

The Auditor and Comptroller General found that the €30 million paid for the Thornton Hall site by the prison service was twice the land's value. The building itself is likely to cost in the region of €200 million.

Mr O'Connell agreed that continued State investment in infrastructure was going to ensure medium-term buoyancy in the building industry.

But he added that other sectors would continue to be strong for the next three to four years at least.

"Commercial and residential are going to hold up as well," he said. The Sisk family owns the Sisk Group.