Morgan Sindall warns of challenging sector as H1 performance dips
CONSTRUCTION group Morgan Sindall, which has operations across the West Midlands, has warned that operating environment for the sector are expected to remain challenging during the second half with no easing of pressure on margins.
The group, which operates through five divisions of construction and infrastructure, fit out, affordable housing, urban regeneration and investments, saw first half revenue drop 2% to £998.5m.
The group’s committed order book as at June 30, 2014 was £2.7bn, an increase of 14% since the previous year end, driven primarily by growth in the order books of Fit Out (up 57%), Affordable Housing (up 27%) and Construction & Infrastructure (up 9%). The regeneration & development pipeline was £3.2bn, an increase on the previous year end of 5%.
Adjusted operating profit of £15.2m was 6% down on the prior year, with adjusted operating margin of 1.5% (2013: 1.6%). This included profit from the sale of investments of £1.7m (2013: £5.9m).
Despite the performance, it said it remained optimistic for the second half with continued positive momentum anticipated within both Fit Out and Urban Regeneration. As such, it said it remained on track to deliver results for the full year in line with the board’s expectations.
The group, which has local offices at Birmingham Business Park in Solihull, Birmingham, said there had been strong performances from its West Midlands operations.
Key West Midlands projects include the appointment by Walsall Council to deliver the first phase of a major regeneration project to transform Walsall town centre. The multi-million pound redevelopment of the Old Square Shopping Centre is being led by Walsall Council after the authority agreed to provide around £8m from its own cash reserves to kick start the project.
The company has started work on two new primary schools for Solihull Metropolitan Borough Council in the Chemsley Wood area. Totalling over £16m, the developments are part of a broader multi-million pound regeneration of the area led by a public-private partnership under the banner: Regenerating North Solihull.
The group also includes affordable housing, regeneration and maintenance specialist Lovell, which has regional offices at Woodgate Valley, Halesowen.
Graham Shennan, managing director of Morgan Sindall, said: “Despite the challenging market conditions persisting into 2014, Morgan Sindall has maintained its ability to secure important contracts and framework wins across the broad range of sectors in which we operate.
“We remain well positioned to capitalise on further opportunities throughout the remainder of the year.”
