Morgan Sindall profits soar as margins restored

Aaron Morby 4 weeks ago

Morgan Sindall returned to form last year with a big uplift in profits driven by strong returns at the fit-out and construction and infrastructure divisions.

Chief executive John Morgan predicts a strong year ahead as Morgan Sindall avoids the troubles of many of its rivals

Chief Executive John Morgan predicted another strong year of growth ahead as margins recover and the firm builds up its cash reserves.

The only hiccup for the group across six operating divisions was property services, which suffered a £1.3m loss after streamlining its contract portfolio.

Overall group pre-tax profit soared 46% to £65m after revenue rose 9% to £2.8bn. As a result average net cash swelled to £118m, a significant improvement of £93m on the prior year.

“Average net cash of over £100m enables us to make the right long-term decisions for the business and we don’t have to do anything short-term just for cash”.

Morgan Sindall trading divisions in 2017
Profit change Revenue change Margin change
Construction/ infrastructure £20.4m 129% £1,395m 6% 1.5% +80bps
Fit-out £39.1m 42% £735m 16% 5.3% +100bps
Property Services -£1.3m n/a £66m 20% -2% -330bps
Partnership Housing £14.1m 5% £474m 9% 3% -10bps
Urban Regeneration £10m -25% £175m 12% n/a n/a
Investments £0.5m n/a £11m n/a n/a n/a

Fit-out had a bumper year after strong work flows in London with profit jumping 42% to £39m and operating margins now passed 5%.

The construction and infrastructure division also romped ahead with operating profit more than doubled from £9m to £20m over the year.

Margins doubled to 1.5% with Morgan saying the business is now on track to meet a 2% construction and 2.5% infrastructure target.

Morgan said: “Our positive cash generation and increase in average net cash in the year has further strengthened our balance sheet and provides us with the flexibility to invest in our regeneration activities whilst allowing us to continue being highly selective with bidding in our construction activities.

“Looking ahead to 2018, we expect continued margin progression in construction and infrastructure, another strong performance from fit-out, further growth from urban regeneration and partnership housing and positive contributions from property services and investments.  

“Consequently, we are confident of another good year of progress and with this positive momentum, are well-placed to deliver a result for the year which is slightly above our previous expectations.”

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