Morgan Sindall posts record £4.1bn revenue

Morgan Sindall has announced record profit and revenue in its unaudited accounts for the year ending 31 December 2023.

The contractor posted a pre-tax profit of £143.9m, up from £85.3m in 2022. The increase represents a steady growth in operating profit after the firm’s 2022 pre-tax profit was hit by a £48.9m building-safety charge.

Morgan Sindall’s revenue was up 14 per cent on 2022 at £4.1bn, with revenue growth in five of its six divisions.

However, the UK’s second-largest contractor saw its overall profit margin decrease from 3.9 to 3.4 per cent compared with the previous year.

The firm ended 2023 with £461m in net cash, up from £355m, and grew its headcount by around 400 people.

Chief executive John Morgan told Construction News: “Cost inflation is clearly not the issue it was this time last year.” But he added: “We do see weakness in the supply chain. It’s an issue we have to manage carefully.”

Morgan said that having a decentralised structure and working with lots of smaller subcontractors helped mitigate the risk of individual supply-chain failures.

The firm’s infrastructure division recorded a high profit margin of 4.3 per cent, up from 3.8 per cent the prior year.

Morgan told CN there was a good market for defence, nuclear and energy projects – sectors in which Morgan Sindall has a strong grounding.

The group’s secured order book increased by £400m to £8.9bn, mostly driven by fit-out, property services and partnership housing.

The firm saw a 1 per cent drop in construction forward orders and a 6 per cent drop in infrastructure bookings.

The firm topped CN’s contractor league table in 2023, winning the highest value of total jobs. Morgan said that while his firm tended to win the most jobs, the jobs were smaller on average.

The contractor’s property-services division posted an operating loss of £16.8m, despite revenue growing by 13 per cent to £185m.

Morgan said the company had been “caught by inflation”, with costs rising higher than the inflation allowed on contracts.

“I think we probably, in hindsight, took on too many projects at the same time,” he said.

“Our operational efficiency wasn’t as good as it should be. That is something that we now have to address.”

The firm announced that it would target investment and acquisitions towards its partnership-housing and urban-regeneration divisions, despite less impressive results last year.

Revenue in the urban-regeneration division decreased by almost a quarter, from £244m to £185m. Partnership housing saw revenue increase from £696m to £838m, although its operating margin decreased from 5.4 to 3.6 per cent.

Morgan said: “We see it as a real growth area for us. Our brand is very good and we have capital that we can invest into lots of housing.”

The company also reported total provisions of £61.6m in respect of liabilities arising from building-safety regulations, up from £48.1m a year earlier.

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