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Morgan Sindall construction profit doubles in 2017

Morgan Sindall’s construction and infrastructure arm saw operating profit jump 129 per cent in 2017 to hit £20.4m.

Turnover for the division also rose slightly from £1.32bn to £1.39bn, giving the company a margin of 1.5 per cent, compared to 0.7 per cent in 2016.

The company said the improved profit was ”driven by the continued focus on contract selection and project delivery”.

Group pre-tax profit was up 48 per cent to £64.9m on revenue of £2.79bn, while borrowings remained relatively low at -£27.8m with a net cash position of £193.4m.

The company saw performance dip in 2015 when it recorded a pre-tax loss of £14.8m, but bounced back in 2016 with pre-tax profit of £43.9m.

Morgan Sindall CEO John Morgan said: “These strong results are evidence of the significant operational progress being made across the group and are a testament to the high quality and commitment of our people.

He added: “We are confident of another good year of progress and with this positive momentum, are well-placed to deliver a result for the year which is slightly above our previous expectations.”

The company now expects its construction margin to improve further in 2018 with the aim of reaching 2 per cent on construction jobs and 2.5 per cent on infrastructure. 

It also addressed the collapse of Carillion, with which it was working with on a number of contracts.

In its report the company stated that it had reviewed the projects and did not expect the projects in question to have a negative impact the company’s finances.

Elsewhere in the company, Morgan Sindall’s fit-out division contributed strong results, with revenue up 15.9 per cent to £735m and profit before tax up 42 per cent to £39.1m.

Its housing partnerships business also recorded a strong 2017, with revenue up 9.4 per cent to £474m with profit before tax of £13.7m.

Morgan Sindall signalled its intentions to expand its partnerships business last year when the MD of its housing division Lovell, Jonathan Goring, was appointed partnerships director.

Readers' comments (3)

  • Good to see someone doing it right!

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  • Headlines of profit "doubled" and "jumped 129%" belies what's really going on - £20m profit on a turnover of around £2Bn is only about 1%. So on that basis what's really happening is the profit has gone from a meagre 0.5% to only about 1%. Hardly a high profit margin and if lessons from the Carillion debacle are to learned from then such slender margin can be easily undermined by problem contacts which not only cancel out any slender margin but render a company vulnerable to losses on individual problem contracts which can bring may bring down the whole company - a scenario that it seems most of the big Tier 1 contractors are susceptible to, especially when they operate on such slender margins in the first place.

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  • In what other sector would you celebrate such a small margin. £2,000,000,000 is a massive number £20,000,000 profit - really? This return is a huge concern, how can they weather any sort of storm - Borrow their way out? Start down that track and we know the outcome.

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