Builder Rok (ROK) says it will cut about 200 jobs as it continues to scale down its capacity in the private-sector new-build market and to reposition the business.

Finance director Ashley Martin said that the company, which currently employs about 360 people in the West Midlands, is planning to further reduce its capacity in this area by the end of the current year to around 60 percent of 2007 volumes.

The move is designed to prepare for the recession in UK construction activity that recent surveys already indicate.

``We are adapting to a slowdown in private sector commercial spend, which will be tighter in the second half and 2009.’’ Mr Martin said. ``However, public sector spending in social housing and education, alongside refurbishments and response maintenance, remain solid and should help offset this.’’

Exeter-based Rok, which continues to recruit staff in other areas of its business, said it hopes to keep its overall workforce at about the 5,500 level as employees in the scaled-down business are offered positions in growing areas, including repairs and maintenance.

Rok also said it was closing its property development operations in order to cope with the effects of the credit crunch, as it unveiled a 22 percent rise in first-half pretax profit.

It said the seven remaining jobs at the property development operations would go and the one-off cost of the closure was £11.3 million pounds.

Rok shares ended the day down 6.7 per cent at 98 pence after the company reported a 22 per cent rise in first-half profit.
Mr Martin said the company was continuing to shift its business mix towards maintenance as it reacts to the crisis in the property market.

‘That’s the direction of travel for Rok, you’ll see a continuation in the business mix change towards refurbishment and response maintenance and away from new build other than social housing new build,’ he said.

In its interim earnings report, Rok said that current trading was solid, underpinned by public sector spending on social housing and education.

While Mr Martin believes there is pressure on government finances, he does not believe this is likely to extend to social housing.

"We think it’s a good place to be but we are not naive, we’re conscious of public sector finances. There is still a huge demand for affordable public sector housing. The Government have made it a big political commitment on their agenda, there are more and more single-parent families, more and more people can’t get on the private sector ladder, so affordable housing is going to be in huge demand.

"And what I think is likely to happen is they might not reduce the headline rate but they’ll just slow it down and where we are mitigating against that is we are continuing to win more and more framework awards."

Mr Martin also said that the company would not be reinvesting in the commercial property division and predicted that the market downturn could last three or four years.

"If we look at the amount of space and empty space there’s going to be particularly if we go into full-blown recession I think it could take three or four years for that market to recover.

"I think Rok’s going to firmly stay out property development. It was good while it lasted, we made good money out of it but the emphasis is on our core building maintenance operations which you can see are performing pretty strongly,’ he said.

The company reported half-year sales of £546.7 million compared with £398.8 million, and also announced an interim dividend up ten per cent at 1.15p per share.ROK shares were down 7p at 98p.