Morgan Sindall has issued a profit warning for 2009 on the back of weak trading in the housing and fit-out markets.
In an update to the City, the £2.1bn-turnover group said challenging conditions in the commercial property and open market affordable housing sectors would hit its bottom line next year. As a result it plans to switch more resources to the social housing market.
It said: “The volume of open market house sales for 2008 is expected to be around half the level achieved last year, when it accounted for 6% of group revenue.”
The consensus pre-tax profit forecast for 2009 was £70m but analysts have revised that figure to closer to £60m after the warning.
According to the company, the fit-out market is “softening” despite the fact it is on track to hit turnover forecasts of £475m this year. In the construction sector the picture was of strong public sector demand and a weakening commercial market.
Morgan Sindall’s shares were down 12% at 657p in early trading on Tuesday morning.
Meanwhile, ISG has said it is “cautious” about the prospects for the smaller commercial fit-out sector although trading for the year ended
30 June 2008 was in line with expectations. Its order book is in excess of £1bn compared with £800m at the same point in 2007.