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Morgan Sindall sees 'challenging' market conditions continuing

Morgan Sindall has warned that “challenging market conditions” will continue for the rest of 2014, after posting falls in profit and revenue in its interim results.

The group’s operating profit for the first half of 2014, before amortisation and exceptional operating items, was £15.2M (first half of 2013: £16.2M) on revenue of £998M, a 2% decrease on the same period last year (2013: £1,019M).

Turnover was down 4% in its construction and infrastructure division to £567M (2013: £593M), and operating profit dropped 8% to £5.9M (HY 2013: £6.4M)

However, the group saw an upsurge in revenue in both its affordable housing unit – 4% to £193M (2013: £186M) – and its urban regeneration business – 24% to £42m (2013: £34m).

The order book of £2.7bn was up 14% on the previous year end figure of £2.4bn.

“The first half has seen an important shift in the balance of our profits, with an increase in the contribution from the urban regeneration business. This trend is expected to continue into the second half and beyond and reinforces our long-term strategy of focusing on both construction and regeneration activities,” said chief executive John Morgan.

“For the remainder of 2014, the operating environment for general construction is expected to remain challenging with no easing of pressure on margins. However, with continued positive momentum anticipated within both fit out and urban regeneration, the Group remains on track to deliver results for the full year in line with the Board’s expectations.

“We are encouraged by the improvement in the quality of our order book reflecting the higher level of activity in the market, which positions us well for the medium to long term.”

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