Morgan Sindall margins slide as profits fall 12%

Aaron Morby 12 years ago
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Stiff competition for work saw margins fall across the Morgan Sindall Group, with construction down to 1.7% from 2.2% last time.

But the firm said it remained confident about the outlook going forward as its urban regeneration business started to see an uplift and generated construction contracts.

Unveiling year-end results John Morgan, executive chairman, said the medium term outlook for business was promising as it invested in a raft of urban regeneration projects.

Pre-tax profits across the group fell 12% to £45m on sales ahead 6% at £2.2bn.

Worsening market conditions also saw the year-end cash balance fall to around £100m compared to £150m last time.

On the construction side, Morgan Sindall’s forward orderbook is down from £2bn to £1.6bn, altough across the group orders were stable at £3.4bn.

Over the coming year, Morgan Sindall said it would continue to reduce its exposure to the public sector, which has been pared down from 70% in 2009 to 50% last year.

It said there were signs of a slow recovery in the London commercial construction market and fitout work is expected to improve from next year as a raft of leases expiries across the country.

Morgan said preparations were already underway to enable the division to capitalise from this expected wave of new opportunities.

Morgan said: “We are pleased to report a solid set of results for 2011 in line with expectations, despite continued challenging markets.

“We are benefiting from being a broadly based business, offering creative, integrated solutions for increasingly complex projects, with a track record of delivery.

He added: “We continue to invest for sustainable growth in the medium-term while maintaining a strong balance sheet and dividend.”

    • Operating profit:£21.1m (2010: £26.9m) on increased revenue of £1,268m (2010: £1,250m)
    • Margin slips to 1.7% (2010: 2.2%)
    • Seeing slow recovery of London commercial sector
    • Forward order book of £1.6bn (2010: £2.0bn); projects at preferred bidder stage of £0.3bn
    • Operating profit: £12.4m (2010: £14.8m) with revenue up by 6% to £438m (2010: £415m)
    • Margin falls to 2.8% (2010: 3.6%) in highly competitive marketplace
    • Recovery expected to be slower and later than expected; 1 million sq ft of space expected onto market in 2013-14
    • Forward order book of £216m (2010: £180m)
    • Operating profit: up 14.1% to £18.6m (2010: £16.1m) on revenue of £462m (2010: £387m)
    • Margin firm at 4.0% (2010: 4.2%), due to changing work mix
    • Connaught acquisition now integrated and debt recovery on target at £20m
    • Stable forward order book at £1.5bn (2010: £1.5bn)
    • Operating profit almost double at £3.9m (2010: £2.0m), revenue up to £57m (2010: £46m)
    • Regeneration increasing activity; on-site with £100m of construction work
    • Five new regeneration schemes secured, valued at £0.8bn
    • Capital employed of £66m (2010: £67m); targeting 15% average ROCE through cycle
    • Growing regeneration pipeline of £1.6bn (2010: £1.4bn)
  • Results by division

    Construction and Infrastructure

    Fit Out

    Affordable Housing

    Urban Regeneration

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