Morgan Sindall sees FY 'slightly ahead' of expectations

Building contractor Morgan Sindall said it expected annual results to be slightly ahead of expectations after posting a rise in half-year profits, despite a tough inflationary environment.

The company on Thursday said pre-tax profit for the six months to June 30 rose 2% to £53.7m. Revenue was up 9% to £1.7bn.

Morgan Sindall said that inflationary pressures were hitting margins and delaying project approvals.

“Where projects are active and underway, the additional costs arising have generally been offset by a combination of contractual protection, operational efficiencies, flexible sourcing and (in the case of Partnership Housing) by house sales price inflation,” the company said.

“On projects where it has not been possible to mitigate all such additional costs in full, the resulting impact on margins has been unavoidable.

“Where projects are being priced for future delivery, the inflationary environment has continued to place some project budgets under pressure particularly in Construction & Infrastructure, which in turn has led to some delays in decision-making and project commencement.”

However, the company added that its order book was “substantial and of high quality”.

“Following our strong first half performance and with the current visibility we have of the rest of the year, we now expect to deliver a result for the full year which is slightly ahead of our previous expectations.”

Reporting by Frank Prenesti at Sharecast.com