The Billion Dollar Balancing Act: Hutchinson Builders

Started in 1912 with a handful of tradesmen, Hutchies now turns over billions yet remains fiercely private and family-owned. Behind the cranes and concrete is a masterclass in cash discipline: a company that proves endurance in construction isn’t about chasing the next boom, but surviving every bust.

If you’ve spent any time in Brisbane in the last hundred years or so, you will probably have seen a Hutchinson Builders banner in the skyline:

Hutchies' construction site: West Village development in West End, Brisbane, Queensland

Hutchies is one of only four Brisbane-based construction companies that have been around for more than 100 years:

• Woollam Constructions (1884)

• Hutchinson Builders (1912)

• Wiley (1918)

• Clarke Services Group (1919)

  
  

All four are privately owned businesses, so their finances are not publicly shared. However, to be one of only four building firms in Queensland still alive since the early 1900s is a huge achievement. These four have bettered the odds in surviving many economic downturns, including:

• World War I and the post-war recession

• The Great Depression

• World War II

• 1961 recession

• Mid-1970s recession

• 1982-83 recession

• 1990s recession

• 2008-2009 Global Financial Crisis

• 2020-21 COVID shock

  
  

A Century of Profitability: Hutchinson Builders

Let’s be honest here: the construction industry is tough. It has the highest rate of insolvency of any Australian industry right now. For example, in FY2023–24, over 11,000 Australian companies entered external administration, and construction made up 27% of them.

To survive that long, you must be doing something right. But what?

These top four are all private businesses, which means we can’t know how profitable they have been, except for those that choose to share publicly.

Hutchies does share. It publishes audited financials and shares data in its newsletters. So today, we’re going to examine them to figure out their secret sauce.

Trends in Financial Performance

Over roughly 20 years of published financials, we can see that Hutchies has grown significantly in top-line and balance sheet strength. However, the last 5–7 years show squeezed margins and very tight working-capital management.

Revenue & Gross Profit

Hutchies’ Group turnover has climbed from around $1 billion in FY11 to $1.2 billion in FY12—a tidy 20% increase. It trended to $1.6 billion in FY16, then continued all the way to approximately $3.3 billion to $3.4 billion in FY24 and FY25.

That’s a long-term CAGR of over 7%, showing a very strong long-run growth story fueled by national expansion and sector diversification.

The downside is that Gross Margins have become heavily compressed over that time. Back in FY21, Gross Profit was $70.7 million on revenue of $2.67 billion (a 2.6% margin). By FY24, it was only $26.4 million on $3.3 billion of construction revenue—that’s well under 1%.

So while the good news is the expansion story of scale and market position, the bad news is that the now much larger business is working much harder for each dollar of margin than they were pre-COVID.

Net Profit

In the mid-2010s, Hutchies newsletters mentioned $35-45 million pre-tax profit on $1.45-1.6 billion turnover, implying stable but low single-digit net margins.

In FY21, they earned $39.3 million before-tax profit on $2.67 billion turnover (1.47%). However, profits fell sharply during the post-COVID material cost crunch. Media and Hutchies’ own FY24 accounts point to before-tax profit of only approximately $6 million, continuing the decline seen in FY23.

FY25 is a clear bright spot: $46.4 million pre-tax profit on $3.34 billion revenue is a definite improvement. In fact, it’s the first time in seven years they say they’re in the black on construction revenue alone. However, management noted that $16 million of that profit is from rents and interest. Despite achieving a net margin of 1.5%, they’ve missed their own profit target for the year by a whole 1% (approximately $30 million).

So the net profit trend shows that long-term profitability fluctuates but remains positive. However, the last cycle has been volatile and margin-thin, with FY25 looking like the potential start of a recovery rather than a new high.

Cash Management

On the positive side, Hutchies has spent most of the past 20 years building a formidable cash buffer. In FY12, they described themselves as debt-free with a $200 million balance sheet. By FY21, the group had over $300 million in cash, edging up to $410 million (FY23), $501 million (FY24), and $566 million (FY25).

Operating cash flows have been strong during the recent recovery phase: FY23 and FY24 generated $121.5 million and $99.1 million respectively from operations, after a much weaker FY21. This liquidity allows them to keep paying employees and subcontractors, even when clients are slow payers or default. The chairman has highlighted this publicly.

This large war chest helps compensate for very slim operating margins during tough times. When you’re turning over billions on wafer-thin net margins, you definitely rely on having deep pockets to survive until the market turns around.

Debtor Days, Creditor Days, and Work In Progress (WIP)

Hutchies doesn’t publish formal Debtor Days data (the average length of time it takes customers to pay), but we can infer them from the balance sheet.

In FY24, trade debtors were $92.4 million against construction revenue of $3.3 billion, which implies roughly 10 days to convert invoices into cash. If this was an SME construction business, that would be incredibly good! However, it probably reflects the contract arrangements, including progress claims. Still, if you’re not diligent about invoicing and debtor follow-up, you’ll never get anywhere near that level of cash conversion from customer invoices.

The year before, it was $107.9 million on $3.12 billion = roughly 13 days. That’s a good trend—they’ve shortened the average time between invoicing and cash collection in recent years.

On the supplier side, FY24 Trade Creditors of $251.2 million against construction costs of $3.3 billion translate to about 28 Creditor Days, down slightly from the low 30s a year earlier. That suggests they’re not stretching payables excessively, which is consistent with their narrative of looking after subcontractors and material suppliers. This means they’re not using their suppliers as a form of free financing.

For Work In Progress (WIP) / contract assets, the pattern is also constructive. Net contract assets (project expenditure including profit less progress billings) dropped from $114 million in FY21 to $140 million in FY23 and then sharply down to $40 million in FY24, which calculates as only a few days' worth of sales. In practical terms, that’s a good trend—it means less cash is tied up in under-billed work, tighter billing, and a cleaner position going into the next invoicing cycle.

The flip side is that this is probably as good as Hutchies’ working capital management can get. With Debtor Days, Creditor Days, and WIP days all kept relatively short, there’s limited further room (or need) to improve funding by squeezing working capital. The extension of this is that future improvements in cash flows are going to have to come from better project margins and not balance sheet improvement.

What Has It Taken for Hutchies to Survive for More Than a Century?

Hutchinson Builders is well known for having a large workforce for their projects. They’ll subcontract work where they need to, but maintaining crews capable of being deployed to worksites across South East Queensland gives them a flexibility that other builders don’t have.

This does add a management layer (and cost) in the group, but it also helps minimize disruptions when many large projects are competing for skilled tradespeople. Anyone who tried to find a subcontractor during the Queen’s Wharf development will recognize this challenge.

A couple of years ago, I listened to Scott Hutchinson talk about this very topic. He acknowledged the cost associated with retaining skilled workers during times of scarcity and high demand, but he saw it as part of the long-term viability of his family’s business. In his words, “the market always turns; we just need to be there when it does.”

It’s also worth highlighting the decision to install non-family executives into the business. While it’s still family-owned, bringing in external management over the past decade has been crucial to ensure that the business kept growing without being distracted by handovers from one family leader to the next generation. That leadership transition shouldn’t be a problem, but many family businesses can struggle with the impact of “handing over the reins.”

Then there’s the long-term financial strategy we’ve analyzed above. It’s one that completely matches Hutchies’ long-term view of the market it operates in—always in demand, yet cyclical.

Surviving for a hundred years in that environment means making sure you manage the most important resources (which are the scarcest ones that are difficult to easily replace) well, so they are available to be deployed when the market turns positive again.

Those important resources are People and Cash.

Caveats, Caveats, Caveats

Hutchinson Builders is a privately-owned group. It publishes some financial data; this does in some years include audited financial reports. However, this data may not always reflect all aspects of Hutchies' related entities, which could change what the published data means.

Thankfully, this is a blog and not financial advice. Nobody’s relying on this to make specific decisions about spending money in their own businesses, but it’s an interesting case study.

Multimedia Resources

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