Tough 2013 sees Morgan Sindall suffer a slump in profits

CONSTRUCTION firm Morgan Sindall has seen a marked decrease in its profits despite an increase in revenue.

In its results for the full year ended December 31, the Rugby-based firm reported revenue had increased to £2,095m from £2,047m in 2012 but profit before tax was down 59% from £34.2m to £13.9m on a reported basis.

Once adjusted – to take into account things such as exceptional operating items and deferred tax credit – the dip in profits narrows to 34%.

However, the firm points out that there were some signs of increased activity and market confidence in the second half of the year and that its order book is up by 8%.

But it admits that margins are under pressure, mainly in construction and infrastructure and affordable housing, due to high competition and increased input costs.

Chief executive John Morgan said: “2013 has seen challenging conditions predominate across most of our markets, with competitive pressures impacting on margins and profitability.

“Notwithstanding this, the positive operating cash flow generated by the business has allowed us to make further investment in strategic assets, key skills and resources, which positions the group well to benefit from future growth opportunities.
 
“Looking ahead to 2014, although there are signs of improving conditions in some of our markets, it is anticipated that upward pressure on supply chain costs and skills availability will provide additional management challenges.

“Against this backdrop, we remain confident that our robust order book and on-going disciplined approach to contract selectivity will support the delivery of growth in this year and beyond.”