Morgan Sindall squeezed by tighter margins

CONSTRUCTION firm Morgan Sindall, which owns Muse Developments, says its performance has been affected by margin contraction.

In an interim management statement ahead of today’s AGM, the firm reported that against the backdrop of continued difficult trading conditions in most of its markets group performance in the first quarter was slightly below the board’s expectations.

“Although group revenue levels held up, group margin was adversely impacted by margin contraction in the construction and infrastructure and affordable housing divisions,” it said.

The group’s forward order book as at the end of Q1 was £3.2bn, up 6% from the year end position, reflecting positive levels of selective bidding activity.

In construction and infrastructure the markets continue to be highly competitive, with the operational focus being on careful contract selection, cost and overhead management, and management of cash in a challenging working capital environment, the firm said.

“Margins continue under pressure across all sectors, however the full impact of this has been mitigated in part by the overhead cost savings derived from the restructuring announced in November 2012.”

Muse, which is the group’s urban regeneration arm, is working on schemes in Salford, Warrington, Stockport and Chester. The regeneration pipeline at the end of Q1 was level with the year end at £2.1bn.