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