Brighter outlook for Morgan Sindall as order book fills up

RUGBY construction firm Morgan Sindall Group has reported that its committed order book is up 9% from the year end position.

In a statement ahead of the firm’s AGM today. it said the order book as at the end of Q1 was £2.6bn while the regeneration and development pipeline was up 2% at £3.1bn.
 
The firm said its overall group performance in the first quarter of 2014 was in line with the board’s expectations and expectations for the year remain unchanged.
 
It said in construction & infrastructure, market confidence has continued to increase, however current margins across most sectors and activities remain tight, with inflationary cost pressures providing additional challenges as expected. 

The committed order book as at the end of Q1 remains strong, up 4% from the year-end to £1.6bn.
 
Fit out has delivered an improved performance in the period, with its committed order book at the end of Q1 up 25% from the low year-end position. The division remains well-placed to benefit from the more positive market conditions, although tender pricing remains competitive, the firm said.
 
Within the construction & services activities in affordable housing, margins in housing contracting remain depressed by the impact of localised labour and material cost inflation.

In response maintenance, the focus continues on business development, which has led to some success in winning profitable new work in the period, and on improving operational inefficiencies which are continuing to impact performance. 

The regeneration mixed-tenure business within affordable housing, which incorporates the division’s open market developments, has performed as expected, with focus on the development and building out of existing and new schemes. 

Open market housing sales are benefiting from sales price inflation and continued support from ‘Help to Buy’, however total unit sales for the year will be constrained by the timing of construction completions.
 
The increased amount of activity on development schemes within urban regeneration which was reported at the year-end has led to completion on a number of phases and an improved performance when compared to the prior year period. 
 
Morgan Sindall’s net debt as at 30 April was £6.2m.