Morgan Sindall Chief Executive resigns

Morgan Sindall's Chief Executive, Paul Smith, has resigned following a profits warning.

Stepping into the breach, Executive Chairman, John Morgan, has been appointed Chief Executive.

In a trading update the construction company warned that: "Our underlying trading for the current year is expected to be slightly below the board's previous expectations although the group will benefit from the £7m gain made on the sale of our medical property investments this year. This gain will in part offset the £10m restructuring charge that will be incurred this year."

Consensus expectations for the full year ending December 31st had been for pre-tax profits of £42.30m on turnover of £2.09bn.

The company spoke of further market deterioration in the UK construction industry since it announced its interims. It blamed on further reductions in public spending, deferred investment decisions and high levels of competition.

In response the Morgan Sindall is cutting costs, re-organising its network of offices delivering construction and its affordable housing business.

However, these organisational changes will have a one-off impact this year, estimated at £10m (including £3.5m of property related provisions). The company describes this as part of an on-going process that will have delivered £55m of annualised savings over the three-year period to the end of 2012.

One bright spot was that there appears to be good visibility of earnings with the forward order book currently standing at £3.0bn with a further £0.7bn of projects at preferred bidder stage (compared with £3.4bn order book and £0.3bn of projects at preferred bidder stage at the start of 2012).

In addition, in line with the company's strategy to increase its focus on regeneration, the regeneration pipeline has strengthened significantly to £2.1bn with a further £1.1bn of major schemes at preferred bidder stage (compared with a £1.8bn pipeline and £0.6bn of schemes at preferred developer stage at the start of 2012).

CM