Morgan Sindall points to signs of improvement amid slump in profits

CONSTRUCTION group Morgan Sindall yesterday boosted optimism in the sector after announcing &ldquo;encouraging signs of improvement&rdquo;, despite unveiling a 28 per cent fall in profits.<br /><br />The group reported pre-tax profits of &pound;20.8m for the six months to 30 June, down from &pound;28.6m the year before. The group&rsquo;s revenues also slipped eight per cent to &pound;1.1bn. <br /><br />The group&rsquo;s &ldquo;urban regeneration&rdquo; division, which is mainly commercial property, fell into the red by &pound;1.1m, compared to a profit of &pound;5.6m the year before after revenues in that business collapsed to &pound;5m from &pound;45m for the same period last year.<br /><br />Last year the group announced it would be taking on more social housing developments due to the downturn in commercial property markets. <br /><br />The recent strong public sector spending has helped the group to weather the storm, with the group&rsquo;s construction arm delivering a record operating profit of &pound;5.7m, up from &pound;4.1m a year ago.<br /><br />Despite &ldquo;challenging&rdquo; short term conditions the group said it was confident of expanding its current &pound;3.64bn order book.<br /><br />Executive chairman John Morgan yesterday said that part of the group&rsquo;s strength was the diversity of the business&rsquo; divisions. <br /><br />But Morgan urged caution on getting carried away: &ldquo;Recovery depends on the extend the commercial market will increase as government spending on construction development decreases.&rdquo; Currently 60 per cent of the company&rsquo;s orders come from the government &ndash; leaving it slightly vulnerable if Whitehall tries to curb spending in construction during the downturn.