Morgan Sindall predicts recovery in orders

MORGAN Sindall raised hopes of a recovery in the construction industry yesterday, predicting that orders would recover before the end of the year.

The London-based group, whose Scottish operations were behind both the Clackmannanshire Bridge and M74 motorway upgrade, reported a fall in both revenue and profits in the six months to June, but remained bullish about its outlook.

Despite admitting that conditions were still "challenging", executive chairman John Morgan said the group was confident that its order book, currently worth 3.6 billion, would be higher at the end of the year.

The group said it saw "tentative signs of short-term market improvement", with projects that had been shelved as the economy slowed now being re-tendered.

Morgan Sindall reported results that were broadly in line with market expectations, with revenue falling 8 per cent to 1.14bn and pre-tax profits down 28 per cent to 20.5 million.

Last year, the group spooked the market when it said it had been forced to move from traditional private housing developments into affordable housing, an announcement that sent its shares tumbling by a fifth.

Yesterday it said that "open market" property reservations were up by 50 per cent on the same time last year, but still below historical levels, and that social new-build orders remained "sound".

Meanwhile the group's construction business made a record operating profit of 5.7m, boosted by public-sector spending, in particular in health and education.

Morgan Sindall's results were hurt by its urban regeneration division. The business, which focuses on commercial property, reported an operating loss of 1.1m, compared with a profit of 5.6m a year ago. Its shares closed down 9.5p at 615.5p.