MJ Gleeson is to reorganise its construction arm in a bid to improve its financial performance.

The contractor plans to merge its two building divisions, Northern Construction and Southern Construction, into one national business, to be called Gleeson Building.

The restructuring will include a reduction in the scale of operations, the closure of two offices and a decrease in the firm’s cost base.

The changes come after the construction arm returned a disappointing set of results last month.

Pre-tax profit for the group rose 86% to £17.6m for the year ended 30 June, but the construction business returned an operating profit of £1.5m, 67% lower than the previous year.

At the time of the results Andrew Muncey, the contractor’s managing director, complained that construction margins had not risen, despite a healthy workload.

Muncey said: “The Gleeson building team has recently suffered from a string of poor results. In order to arrest this decline and avoid relegation to the lower divisions I have introduced a new formation and will be discussing our revised tactical plan with the squad this week.”

He said this week that the company would be more selective about which projects it took on.

“We will only embark on the construction element when we and our customers are satisfied that the right solution and the right price are in place,” he said.

Gleeson has estimated that the cost of restructuring will be £4-5m.

This will be reported as an exceptional item in the company’s results for the year ended 30 June 2005.