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Morgan Sindall fails to benefit from construction boost

Morgan Sindall fails to benefit from construction boost
Morgan Sindall has announced a drop in construction margins despite the rest of the UK experiencing a surge in the sector.

The company released a downbeat management statement this morning (November 7th) which explained that the company had been affected by "margin contraction in the Construction & Infrastructure" division. It was not all bad news however as Morgan Sindall said that Q3 revenue had held up well compared to 2012 and affordable housing work had also improved with sales rising by 41 per cent.

Despite the UK's property market experiencing positive conditions, the company warned: "There remains significant competitive pressure on construction revenue and margins, exacerbated by increasing material costs and subcontractor costs.”

Morgan Sindall's report is in stark contrast to other companies operating within the construction sector. The recent Markit/CIPS UK Construction Purchasing Managers' Index showed that industry was steadily improving. Figures had reached a six-year high of 59.4 in October, up from 58.9 the month before. Not only was this an indicator of growth and the highest rate since 2007 but it also represented the sixth consecutive month of improvement.

David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, expressed his positivity over the figures: “The future is looking bright for the UK construction industry as it soars into the final quarter with its strongest performance in over six years, boosted by a strengthening surge in activity broadening out across all sectors.

Construction was hit hard by the recession but it is now beginning to show signs of improvement despite Morgan Sindall's setback. Despite the fall in margins the company said that it was still inline with the board of directors' expectations. Its forward order at the end of the third quarter was up to £3.3 billion, a six per cent improvement from its half year.

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Date: 07/11/2013 16:39:16

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