黑洞社区

Morgan Sindall chief executive John Morgan has poured cold water on hopes that contractors could see margins hit 5% in the future.

Last month, 黑洞社区鈥檚 Top 150 contractors and housebuilders survey revealed that margins at the top 50 contractors had increased to 1.78% - from just the 1.05% recorded in last year鈥檚 survey 鈥� but still some way short of the figures a number of contractors have set themselves.

Both Balfour Beatty and ISG have said that margins of 5% are achievable in the long run with Balfour Beatty boss Leo Quinn saying the figure can be met by 2020.

But Morgan (pictured), who has held the top spot at the 拢2.6bn business since 1994, said 5% was a 鈥渓ong way away鈥� for firms.

Speaking as Morgan Sindall announced a 50% hike in half year profit to 拢23.1m yesterday, Morgan said the 2% figure he has set his construction business was 鈥渧ery realistic鈥� and added: 鈥淔rom our past experience, 5% is a very, very long way away. If we could [get 5%] it would make the business very, very exciting.鈥�

The firm鈥檚 construction and infrastructure arm saw margins hit 1.1% in the first six months of this year 鈥� up from 0.5% on the same period in 2016 with Morgan saying that margins of 2% for construction and 2.5% for infrastructure were achievable over the next four years.

Morgan, who said the firm wanted to grow its business organically and was not interested in bolt-on acquisitions, said the business had 鈥渓earnt a lot鈥� from a number of problem jobs in the London building market as well as the two loss-making schemes at Faslane in Scotland that it inherited with its deal to snap up Amec鈥檚 construction and civils arm nine years ago.

He said the firm had derisked its construction arm by focusing on jobs it can actually deliver as well as steering clear of jobs with risky contract terms. 鈥淲e are looking at margin growth not turnover,鈥� he added.