Construction group Morgan Sindall – which has a number of major subsidiaries in the West Midlands – has reported a record half-year performance, with profits up 31 per cent as recent acquisitions buoyed results.
The firm, which is the UK’s biggest supplier of office interiors, reported underlying pre-tax profits of £33.1 million against £25.2 million in the first six months of 2007.
Shares were up 9.5p to 569.5p after recent falls following last month’s news of a £58 million writedown in its construction arm and a warning over next year’s results.
The stock plummeted last month when it said next year’s figures would be hit amid the housing and property market slowdown.
But Morgan Sindall confirmed that it was seeing strong growth from areas such as public sector construction and infrastructure services.
Revenues in the six months to June 30 rose by 48 per cent to £1.24 billion, with both profits and revenues the highest ever seen at the half-year stage.
Stripping out the new acquisitions, underlying revenues rose four per cent and profits remained broadly flat, according to Morgan.
Earnings growth of 90 per cent in infrastructure services and 86 per cent in construction helped offset weaker performance elsewhere.
Its office refitting operation saw operating profits fall seven per cent to £11.5 million, while its affordable housing business suffered a 23 per cent fall in operating profits to £8.8 million.
Morgan Sindall’s urban regeneration offering bought last year performed in line with the group’s expectations, but the firm said its short-term outlook was “subdued” in the face of a downturn in the commercial property market. The weakness in commercial property and open market housing will continue throughout this year and next, but Morgan Sindall said it was on course for record-breaking figures in 2008.
Strong demand for construction in the public sector in particular was providing a boost, now accounting for 70 per cent of the division’s revenues.
The group said a £4.2 billion forward order book gave it confidence to weather the troubles ahead.
It has also secured a number of recent major contracts, including a £62.5 million road scheme from Lincolnshire County Council and a £12 million deal from airports operator BAA to resurface the main runway at Edinburgh airport.
In the West Midlands, the firm’s subsidiaries contributed strongly to the group’s overall performance.
Affordable housing speciallist Lovell, which has regional offices in Woodgate Valley, Birmingham, and its national head office in Tamworth, said its forward order book was at £1.4 billion.
“Lovell has made a solid start to 2008, thanks to continued Government investment in social housing provision and renewal,” said Lovell managing director Stewart Davenport. “As most of our business is in new-build social housing and housing refurbishment, we are not as affected by the current downturn in open market house sales.’’