Morgan Sindall profits surging amid 'much stronger' fit-out trading

Morgan Sindall

Morgan Sindall

The half year results, announced on the 8 August, are expected to show profit before tax of around £23.5m - a 45 per cent increase on the same period in 2016.

Shares were up more than 4% during morning trading on the London Stock Exchange, with the company predicting full-year results to be "significantly ahead" of expectations.

Morgan Sindall Group revealed its profits are going to be "substantially" ahead of expectations thanks to margin and profit growth in office fit-out and margin improvement in construction and infrastructure in the first half of the year.

"The strength in Fit Out was no big surprise. After recent events in the sector, strong performance in this sector is something to write home about".

However, the performance in construction and infrastructure was more notable.

Carillion, one of the largest British construction companies, said last Monday that it would book a 845 million pound ($1.1 billion) writedown, prompting its CEO's exit, a profit warning and suspension of its dividend.

Jefferies also added the firm "did well to stay out of HS2" due to the high level of risk associated with "high-profile "trophy" contracts".

The contractor also reported average daily net cash for the first half of £132m, with net cash of £97m at 30 June 2017.

"Conversion of revenues into cash is paramount to success in the world of construction and the lack of cash is causing some severe headaches at the moment, although Morgan Sindall is in no need of aspirin", said the Jefferies analyst.

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