More competition sends profits at Morgan Sindall plummeting

 
City A.M. Reporter
CONSTRUCTION company Morgan Sindall yesterday said its half-year profits had slumped 95 per cent as increased competition hurt margins.

The company said that an exceptional charge of £13m taken as a provision against amounts recoverable on a small number of older construction contracts also hurt profit.

Morgan Sindall, which builds houses, refurbishes offices and undertakes redevelopment projects, said it did not expect overall market conditions to improve significantly in the second half of 2013.

Profit before tax fell to £1m in the six months ended 30 June from £18.8m a year earlier. Revenue rose two per cent to £1.02bn.

Adjusted gross margin fell 1.2 percentage points to 8.1 per cent.

Morgan Sindall, which gets roughly half its revenue from government contracts, had reported an eight per cent decline in 2012 revenue, hurt by government spending cuts.

The company, which got 70 per cent of its work in the construction business from the public sector about four years ago, has been reducing its exposure to the public sector as it copes with government budget cuts.

Morgan Sindall’s order book was flat at £3.1bn.