Outlook cool for City Refrigeration despite strong growth in profits

Sir Willie Haughey's company saw turnover rise by more than �64 million. Picture: Donald MacLeod
Sir Willie Haughey's company saw turnover rise by more than �64 million. Picture: Donald MacLeod
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ENTREPRENEUR Sir Willie Haughey’s business empire remained in rude health last year as turnover and profits rose across the board at City Refrigeration Holdings.

But the company cautioned that a slowdown in the number of construction and refrigeration installation projects expected in 2012 might put it on a cost-cutting drive in an effort to retain its margins.

Turnover rose by more than £64 million to £368.3m in the year to the end of 2011, according to financial statements published at Companies House yesterday. The Gorbals-based firm cited growing demand from existing customers in the UK and Australia, as well as new contracts, for its recession-busting performance.

Pre-tax profits also grew, at £6m from £5.2m in the previous year.

The largest part of the group, facilities management and cleaning services, grew income from £228.2m in 2010 to £274.2m, although it said profit margins were slightly lower due to investments made during the year establishing new services and winning customers.

Nevertheless, profit margins improved at the company’s services division, which includes construction services as well as the installation of refrigerators, bakery, security and air conditioning equipment. Income grew to £89.8m, up from £71.6m in 2010.

But the firm warned that the rise was due to a number of projects in 2011 “which are not expected to recur in 2012”.

The company said “pressure from the marketplace” to reduce costs is expected to continue in 2012 but that the board is confident that similar margin levels will be maintained.

The company’s equipment rental and maintenance division raised turnover slightly to £4.3m, from £4.1m.

Staff numbers at City burst through the 10,000 level, with almost 1,000 new employees brought in last year to bring total numbers to 10,707.

Haughey, who was knighted for services to industry in the Queen’s Birthday Honours last month, is thought to be the firm’s highest-paid director. His pay went up from £176,000 in 2010 to £550,000 in 2011.

The fridge magnate’s family made headlines when it released an unusually high £11.7m dividend in 2010. Last year, the payout to shareholders was a more modest £3.8m, which reflected the take-home profits of the firm after paying £2m in taxes.

Both Haughey and his wife Susan, who founded the company together in 1985 to supply fridges to pubs, last year donated £35,000 to help entrepreneurs. The money was used to fund a programme, Entrepreneurial Spark, which became Scotland’s first business accelerator. Haughey’s fellow entrepreneur, Sir Tom Hunter, followed suit by launching a similar programme at the Ayrshire headquarters of his West Coast Capital last month.

The base at Haughey’s City Refrigeration Holdings headquarters is already home to more than 30 businesses.

The entrepreneur, who is estimated to be worth £152m, is understood to have donated £1m to the Labour party since 2003, though not through City Refrigeration.

The records showed that the firm made charitable donations of £678,000, down from £1.3m last year, but made no political donations.