Firm ups interim dividend by nearly a quarter as it posts first half profits higher than predictions, boosted by margin improvements

Morgan Sindall outperformed its own profits forecast for the first six months of the year, boosted by margin growth in its fit out arm and profit recovery across its construction and infrastructure operation.

The firm posted total revenues for the six months to 30 June 2017 of £1.3bn, up 14%, and pre-tax profits of £23.7m, up 47%. Last month it predicted a profits hike of 45%.

The company said it had seen an “excellent performance” from its fit out division, with revenues coming in at £339m, up 15%, and adjusted operating profit rising 27% to £14.6m, with margins up to 4.3% from 3.9% in the same period last year.

Operating margins in its construction and infrastructure operation grew from 0.5% to 1.1%, with an adjusted operating profit of £7.6m, up 138%, on turnover of £694m, up 13%.

The firm’s partnership housing business saw revenues up 9% at £200m and operating profit up 20% to £5.5m. Urban regeneration’s results were lower due to scheme completions, with £2m of operating profit, versus £4.9m, on turnover of £71m, up 78%.

The group’s order book rose 5% to £3.8bn.

Morgan Sindall’s chief executive, John Morgan, said the firm had delivered “a strong set of results”, while the trading performance, combined with increasing confidence in the business, meant it was increasing the interim dividend by 23% to 16p per share.

Recent wins for the firm included the award of a two-year extension to its three-year Framework Agreement with Western Power Distribution to deliver excavation, cable laying and reinstatement works in the West Midlands region, worth £60m, and the appointment to three major Scottish local authority main contractor frameworks – Aberdeenshire council main contractor framework, the City of Edinburgh’s first major project main contractor framework and the hub South West Scotland framework.