Morgan Sindall’s pre-tax profit has dived after a difficult 2014, the firm announced today.
In its results for the year to 31 December 2014, the firm revealed its profit had dropped 19.5% to £25.2M, compared to £31.3M the year before.
Group revenue was up 6% to £2.2bn, driven mainly by growth in the fit-out and affordable housing divisions.
Chief executive John Morgan said “trading conditions remained challenging”.
The contractor said it had suffered from problem contracts in its construction and infrastructure division, where the operating margin fell to just 0.3% from 1% in 2013.
In October, Morgan Sindall warned its 2014 results would be hit by inflation, contract overruns, and a fire on a Nottingham Trent University project.
“The overall group result for the year is disappointing, having been adversely impacted by a small number of construction contracts in construction and infrastructure,” Morgan said.
“Looking ahead to 2015, lower returns in construction and infrastructure are expected to remain for at least the first half of the year, as lower margin construction contracts tendered in 2012-2013 are worked through to completion.”
Construction and infrastructure review
In Morgan Sindall’s construction and infrastructure business, revenue was down 5% to £1.17bn (2013: £1.23bn). Operating profit plunged 72% to £3.5m (£12.7m).
Within the division, construction accounted for 55% of revenue at £639m, while infrastructure accounted for 45%.
Morgan Sindall blamed the disappointing result on “delivery pressures related mainly to a small number of construction contracts that are all due to complete within the first half of 2015”.
It added: “These contracts all experienced programme slippage and increases in costs to complete as a result of inflation and additional unexpected resource requirements.
“The group said management teams had been changed at both local and divisional levels during the year to address the divisions operational issues.”