Morgan Sindall sees no rise in margins until next year

Grant Prior 8 years ago
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Morgan Sindall bosses can see no let-up for the struggling construction arm until next year at least as wafer-thin margins continue to dog the division.

Construction and infrastructure revenue dipped to £567m for the six months to June 30 2014 compared to £593m last time as operating profit fell to £5.9m from £6.4m.

The company said: “The overall trading environment for Construction & Infrastructure has remained difficult throughout the period.

“The combination of lower margins from work tendered in 2012-2013 and cost inflation, both at a time of improving general market activity, has provided some significant on-going challenges particularly in the construction activities.”

And things look set to be tricky for the rest of 2014 despite a management shake-up and “further overhead cost savings”.

Chief Executive, John Morgan said: “For the remainder of 2014, the operating environment for general construction is expected to remain challenging with no easing of pressure on margins.”

Construction and infrastructure made-up the lion’s share of turnover at the company with group results for the half-year showing £998m of revenue compared to £1,019m last time as adjusted pre-tax profit dropped to £14.2m from £15.4m.

Fit-out revenue was down to £195m from £213m but operating profits ticked-up 10% to £5.5m “driven by operational efficiency in project delivery rather than through higher tender margins in the marketplace, which still remain competitive.”

The London office market accounted for 75% of revenue with other regions at 25%.

 

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