Booming Morgan Sindall sets new targets for business as firm turns in record numbers

A booming Morgan Sindall has set new targets for its businesses after the firm turned in a record set of results last year with pre-tax profit jumping more than 100% to £126m.

The firm, which last year revised its profit forecast upwards four times, said the numbers had outstripped those posted in 2019 before the pandemic struck the following year.

And chief executive John Morgan added that it was expecting 2022’s results to be ahead of previous expectations with analysts now forecasting pre-tax profit to be around £127m this year and close to £133m next.

Revenue last year was up 6% to £3.2bn – a 5% hike on the number it posted in 2019 – but the biggest percentage rises were seen in its profit column where the £126.2m pre-tax profit recorded last year was a 108% rise on 2020’s number and 42% up on the previous record pre-tax profit of £88.6m filed in 2019.

Net cash at the year end was up £25m to £358m with average daily net cash up by £100m to £291m and nearly £200m more than the £109m posted for 2019.

Morgan said: “The group is in its best shape ever. Our strategic focus on construction and regeneration is driving positive momentum across the group and is enabling us to upgrade our divisional medium-term targets today which provide the framework for our next stage of growth.

“Underpinning these targets is our commitment to maintaining a strong balance sheet at all times and to hold a substantial net cash position. This continues to allow us to make the right long-term decisions for the business.”

Analysts said the new targets were implying a pre-tax profit of around £180m which would be a 40% rise on 2021’s number.

In a broker’s note, Numis analyst Jonny Coubrough said: “We view medium-term targets as highly credible given the last set of targets were achieved within two years of being introduced despite the period coinciding with the pandemic.”

Its biggest business, infrastructure, which last year posted revenue of £826m and operating margins of 4.4%, has been handed a £1bn turnover target and margins of between 3.5% and 4% over the medium term.

Construction, which last year had income of £694m and an operating margin of 3.2%, has also been handed a £1bn turnover target and operating margins of between 2.5% and 3%.

Fit out, which shrugged off worries about the impact of the pandemic on the office market to see turnover rise 14% to £795m and a 38% rise in operating profit to £44.2m last year, is now expected to hit operating profit of between £40m and £45m.

And partnership housing, which Morgan has previously said could be the biggest earner for the business, is expected to see operating margins of 8%. Last year, revenue was up one fifth to £572m with operating margins of 5.8%.

The firm said it has a “small number” of schemes where it will be liable to carry out remediation to cladding. It added the costs are “not expected to be material and will likely span a number of years”. It said that it would begin to start paying the residential property developer tax this year.