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Morgan Sindall raises margin forecast as orders reduce

Morgan Sindall has said it expects construction and infrastructure margins to hit “at least 2 per cent” for the second half of 2018.

In a trading update to the stock market, the group said construction profitability had improved since 1 July.

However, its order book as of 30 September was down 11 per cent compared with the end of 2017 and down 5 per cent since 30 June to stand at £3.4bn.

The company attributed this decline to “continued focus on contract selectivity and quality of earnings”. 

Morgan Sindall said its cash position had strengthened, with average daily net cash for the full year expected to be in excess of £90m – higher than previously forecast.

Its fit-out business was said to be performing well, though its order book had declined 6 per cent compared with the end of 2017.

The contractor also revealed that its investments business had faced delays in schemes being developed in joint venture with local authorities, which Morgan Sindall said would impact performance for the year.

Overall, the group said it was on track to deliver full-year performance in line with expectations.

At its half-year results in August the company said it had adopted a “more selective” approach to the work it took on, which saw its construction and infrastructure order book decline 5 per cent to £1.76bn.

Morgan Sindall said it expected this approach would improve its construction margin further in the second half of the year.

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