Morgan Sindall profit eroded by tough markets

Construction and regeneration group Morgan Sindall reported a decline in pre-tax profit, in line with expectations, and slashed its dividend as it continues to battle against difficult markets and economy.

Pre-tax profit fell 15% to £34.2m for the year ended December 31st 2012 while revenue for the year dropped 8% to £2.047bn.

Adjusted earnings per share slipped to 79.3p compared to 86.7p in 2011 and year-end net cash fell to £50m from £109m before.

Morgan Sindall said it was a solid performance in tough markets.

CEO John Morgan commented: "2012 has seen a solid performance in what has been a very tough market. The newly structured board is focused on managing the business tightly to ensure we emerge from the downturn in a strong position to take advantage of the opportunities we believe lie ahead."

The group's forward order book fell to £3.1bn from £3.4bn a year earlier with projects at preferred bidder of £0.5bn compared to £0.3bn in 2011.

Average net debt balance was £40m versus net funds of £23m in 2011, as expected. "This reflects an increase in working capital deployed across the group and reduction of construction-related revenue," the group explained.

"Our exposure to infrastructure continues to grow, and we see further opportunity to leverage our strong track record and gain market share. The momentum in our regeneration pipeline reinforces our confidence that returns from our investment will start to increase over the medium term and deliver superior returns," Morgan added.

The group said margins were stable due as it kept an eye on costs. Its disposal of mature investments released £26m of capital to be used in major housing and urban regeneration schemes, it said.

A final dividend of 15p has been proposed, down from 30p the year before, giving a total dividend of 27p per share from 42p in 2011.

CJ