Morgan Sindall margins fall in first half

Margins at Morgan Sindall’s construction and infrastructure business have dropped 0.5% over the past six months due to the “competitive market”, it said in a statement this morning.

The firm said it would target private sector and infrastructure growth as pre-tax profit overall also dropped 9% from £18.4m to £16.7m over the period.

But revenue at the contractor rose 11% over the first half, from £982m to £1,087m.

Turnover grew particularly strongly in fit-out and affordable housing, up from £179m to £222m and from £173m to £228m respectively.

Profit at the affordable housing business jumped 20% from £6.9m to £8.3m, while profit at the fit-out business dropped from £6.9m to £6.1m.

Operating profit in its construction and infrastructure business fell from £12.2m to £9.5m as turnover remained steady at £617m, marginally up from £612m in the previous six months.

Operating margins dropped in all three of its businesses, from 2% to 1.5% in construction and infrastrucutre, from 4% to 3.6% in affordable housing and from 3.8% to 2.7% in fit-out.

The firm cut the proportion of its work from the public sector from 60% to 50%.

The statement said: “Looking forward, the market is expected to remain highly competitive with public sector work and roads construction continuing to shrink. However, we are focused on sectors that are expanding.”

Executive chairman John Morgan said:  ”Our broad sector spread, increasingly joined up approach and focus on more complex projects has helped to underpin a solid set of results.

“While market conditions remain challenging, we continue to make the most of opportunities as they present themselves and invest in our businesses in order to position them for growth in the medium-term.

“We look to the future with cautious optimism and are confident that we are well positioned to deliver long-term sustainable growth.”