Morgan Sindall banks on infrastructure in tough market

Grant Prior 12 years ago
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Morgan Sindall has managed to increase pre-tax profits despite a drop in turnover and “difficult market conditions” which are expected to remain “challenging” for the foreseeable future.

Half year results for the six months to June 30 2012 show Morgan Sindall made a pre-tax profit of £18.8m compared to £16.7m last time on turnover down 8% to £1bn from £1.087bn.

Operating profits and turnover were down in the core construction division to £8.5m from £9.5m and £583m from £617m respectively.

Morgan Sindall managed to maintain its construction margin at 1.5% despite “challenging macro-economic conditions and downward pressure on margins across the industry.”

The firm is focusing on growth infrastructure sectors where “margins are less constrained”.

Morgan Sindall said: “The market will undoubtedly remain competitive.

“The division expects a rise in opportunities as an increase in spend is expected in infrastructure, primarily in the rail and energy sectors, and it is well positioned to take advantage of this anticipated investment.”

Fit-out saw a slight rise in margin despite operating profits dipping to £5.5m from £6.1m and turnover down to £191m from £222m.

But things look brighter for the rest of the year with order books up to £230m from £133 with an increase in commercial refurbishments.

The firm’s urban regeneration and investment divisions saw increases in turnover as Morgan Sindall continued with strategy of “investing the cash generated from our construction activities to grow our regeneration-related divisions and capitalise on the medium-term opportunity driven by release of land by the public sector.”

Executive Chairman John Morgan said: “We have delivered a solid performance over the first half of 2012 and we are on track to meet our expectations for the full financial year.

“Despite the challenging economic environment, we are encouraged by the continuing opportunities in growth infrastructure sectors and we remain committed to investing in our regeneration business to drive growth over the medium to long term.

“Whilst we expect market conditions to remain challenging in the short term, we believe our strong track record of successful delivery and our ability to provide our customers with creative, integrated solutions leaves us well positioned for the future.”

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