Stockport Exchange Three 2, Muse, P.Muse
Work is due to start early next year on Muse's Stockport Exchange Three. Credit: via Muse

Morgan Sindall optimistic on 2021 results

Neil Tague

The construction group’s third quarter trading update said that across its six divisions, work worth £8.7bn had been secured as of 30 September, up 7% year-on-year.

In August, Morgan Sindall released its half-year results, reporting pre-tax profit of £53,1m along with healthy increases in net cash and turnover.

That trend has continued. Steve Crummett, finance director, said: “Since the time of the half year results, trading has continued to be strong. Inflation in the supply chain and the availability of materials and labour have remained manageable.

“Based on the performance to date and with good visibility of secured workload through to the end of the year, it is now expected that the Group will deliver a full year performance which is slightly above its previous expectations.”

Star of the show has been the Overbury fit-out division, which has enjoyed a record period of winning work and converting projects from preferred bidder stage into contract. At the end of September, its order book was £944m, up 62% from the half year position and up 130% from the year end.

Completion has now been reached on HMRCs 270,000 sq ft Liverpool hub at the India Buildings, where Overbury stepped in as fit-out contractor in 2019.

Morgan Sindall’s construction & infrastructure division is expected to deliver a full-year operating margin of around 3% for construction and 3.5% for infrastructure.

The Lovell partnership housing division reported high levels of unit sales and completions as well as construction activity and is well-placed to meet its medium-term return on capital target of 20% for the year. Average capital employed for the year is expected to be £155m to £160m.

Lovell is working on one of the keystone projects within Manchester’s £4bn Victoria North masterplan.

There may be challenges ahead, of course. Although the group said that Muse’s urban regeneration activities have progressed as planned, “viability challenges exist on some projects not yet commenced”.

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Inflation, materials and labour remain manageable however tender pricing for clients have shot up significantly. Our bigger contractors are seeking to take advantage of clients in the current environment.

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