Perth-based housebuilder A&J Stephen said planning delays and declining margins led to the long established form recording a loss last year.
The family firm, which was established in 1935, saw its turnover almost half from £19 million in 2018 to £10.6m for the year ending March 31 2019.
Stephen, which has a workforce of 75, recorded a loss of £2.2m last year against a profit of £656,000 in 2018.
Managing director John Stephen said the sector had been “challenging” but said he was hopeful the company’s investment in a new timber kit factory would start to pay dividends.
He said: “Our current financial performance was forecast some time ago and is symptomatic of a number of local and national factors – mainly delays in consents but also due to the greater economic and political context across the country.
“Margins in the sector continue to be challenging but we are hopeful that our new timber kit factory will help reduce construction times and improve margins, providing benefits to both the business and our clients.”
During the year the firm’s margins on house sales declined from 17% to 3%. Stephen also wrote down the value of land at its Chapelton development in Aberdeen.
Mr Stephen said the current year trading was “encouraging”, with strong interest in its 46 home West Woodlands development off Glasgow Road in Perth.
He said the firm was continuing to invest in strategic land acquisitions to maintain its long term sustainable growth strategy.
He said he was hopeful the firm would add to its workforce in 2020.
“We expect an improving picture with sales encouraging across a number of our developments, specifically West Woodlands in Perth and our Tornagrain development near Inverness,” he added.
“Construction on our much-anticipated new development in Scone will also commence in the spring, with the first residents moving in by late summer.”
Stephen had no net borrowings, shareholder equity of £23.3m and cash in bank of £3.6m at the financial year end.