Morgan Sindall has blamed delays in procurement of major infrastructure projects for a £185M fall in civil engineering and construction turnover in the first six months of the year.
Its newly merged civils and construction business made £612M in the first six months of 2010, compared to £797M in 2009.
It said revenue was lower due to a slight fall in demand for construction services, delays in the procurement of major infrastructure projects and the impact of the transition between regulatory periods in the utility services sector.
The newly merged construction & infrastructure division was reported for the first time on a combined basis. It made an underlying operating profit of £12.2M compared to £15.0M last year.
This profit is stated before restructuring costs of £1.7M. This are expected to total £6M, but is expected to eventually deliver £6M of savings annually. Savings of £1.5M will be delivered in the current financial year.
The company said the outlook for the division remains “challenging”, despite a reasonable pipeline of construction opportunities and a number of large infrastructure projects including Crossrail and the Second Forth Road Crossing being tendered.
It said uncertainty remains over the precise levels of future public sector demand and that it was waiting for the outcome of the Comprehensive Spending Review to gain a clear understanding of specific departmental plans for future public spending.
Its forward order book as at 30 June was £2.1bn, an increase of £500M since the start of the year.
Overall, the company said its results show a good performance given the challenging market conditions.
“These results demonstrate our continued strategic and operational progress,” said executive chairman John Morgan. “Whilst we are conscious that market conditions remain challenging, our financial strength, breadth of capabilities and leading positions across a range of market sectors leave us well placed to capture further market share. We look to the future with confidence.”
Underlying profit before tax, amortisation of intangible assets and non-recurring costs was £23.1M on revenue of £980M. Last year it made £23.9M on revenue of £1.14bn.
The Group remains financially strong with net cash at 30 June 2010 of £138M and with £100M of undrawn banking facilities.