黑洞社区

Morgan Sindall does not expect margins in its construction business to improve until the second half of 2015, after ongoing 鈥渄ifficult鈥� trading conditions saw the business post a dip in revenue and profit over the first half of this year.

In its results for the six months to 30 June 2014, announced this week, Morgan Sindall鈥檚 construction and infrastructure business posted revenue of 拢567m, down 4% on 拢593m over the same period last year.

Adjusted operating profit fell 8% to 拢5.9m, giving an adjusted operating margin of 1% - broadly similar to the 1.1% the firm posted over the same period last year.

After posting its 2013 results in February - when the firm reported a sharp fall in profit - Morgan Sindall chief executive John Morgan (pictured) said he expected to see an improvement in margins over the course of this year.

But speaking to 黑洞社区 this week Morgan said that despite a general upturn in the market, it would now not be until the 鈥渟econd half鈥� of 2015 that margins in the construction business picked up - and even then the improvement would not be 鈥渄ramatic鈥�.

He said the construction and infrastructure business - which comprises around half the group鈥檚 revenue - was hit by a combination of lower margins on work won in 2012 and 2013 and cost inflation, with trading conditions particularly difficult in London and the south of England.

鈥淲e鈥檙e finding that inflation is higher than we expected and that is holding back margins in the short-term,鈥� he said.

鈥淚t鈥檚 a bit of a headwind for us. But looking forward, construction is looking much more favourable.

鈥淭here鈥檚 much more work around and the terms and conditions and the margin on the work we鈥檙e now winning is better.鈥�

Overall, Morgan Sindall Group posted revenue of 拢998.5m in the six months to 30 June 2014, down 2% on 拢1.019bn over the same period the previous year.

The firm posted pre-tax profit of 拢13m - up from 拢1m over the same period last year, when performance was hit by a 拢13m write-down on a clutch of problem contracts in its construction business.

Operating profit stood at 拢14m over the period, broadly similar to the 拢14.8m the firm posted over the same period last year, prior to the 拢13m write-down. The company鈥檚 order book was up 14% on the same period last year to 拢2.7bn.

The firm pointed to the continued growth of its urban regeneration business, which posted 拢3.5m in adjusted operating profit - up from 拢400,000 for the same period last year - with revenue rising 24% to 拢42m.

The regeneration business is expected to contribute around 拢8m in operating profit over the full year.

Morgan said the increase in the contribution of profit from the regeneration business marked 鈥渁n important shift in the balance of our profit鈥�.