Morgan Sindall posts ‘record’ 2023 with US$5.2 billion revenue

Building record profits, Morgan Sindall reports 2023 as a success and is optimistic for 2024. (Image: Adobe Stock)

The construction and regeneration group’s cash-on-hand was reported as US$584 million; up US$134 million from 2022.

“Despite facing market headwinds in the year and the disappointing losses in Property Services, the diversified nature of our operations and capabilities has allowed us to continue to make significant strategic and operational progress,” wrote Group CEO John Morgan in the company’s annual report.

“In addition, our focus on positive cash flow, together with our strong balance sheet, has positioned us well to benefit over the long term from the opportunities available in our markets.”

One of three segments within the group’s construction business line, the property services operation focuses on “response and planned maintenance activities provided to the social housing and the wider public sector.”

“Housing maintenance and the general state of repair of housing stocks are increasingly the focus for local authorities and housing associations,” notes the report, addressing some of the challenges for the property services operations. “During the year, the business has been severely impacted by general cost and labour inflation which has impacted the profitability of its contracts.”

The property services division reported an operating loss of $21.3 million. In 2022, the segment reported a $5.4 million profit.

However, the group claimed progress in nearly every other division.

Construction segments saw revenue increase 18%, infrastructure was 15% higher, while the fit out division (focused on office space and education) had an ‘excellent year’, according to the report, with a 38% increase to revenue. Partnership housing increased revenue by 20%.

Morgan Sindall provides 2024 outlook

Noting the new year has begun with uncertainty, the group’s annual report was, overall, optimistic for 2024.

“While there remains some uncertainty in the wider economy, reducing inflation and the prospect of lower interest rates provides a backdrop of confidence for the year ahead,” says the report. “Together with its high-quality and growing order book spread across a wide number of sectors covering the built environment, the group is well-positioned for the future and on track to deliver a result for 2024, which is in line with its current expectations.”

The firm reported a 2023 year-end order book of $11.3 billion, which is up 5% from 2022.

Since divisional targets were first set in February 2022, two segments received updates since. Property services’ expectations have been downgraded while fit out expectations were upgraded twice (‘significantly’ in February of last year and then again in August).

Targets reported for each division are as follows:

Construction: $1.3 billion, operating margin of 2.5-3% per annum (pa)

Infrastructure: $1.3 billion, operating margin of 3.5-4% pa

Fit out: $63.3 to $88.6 million annual operating profit

Property services: $9.5 million annual operating profit

Partnership housing: 8% operating margin/return on capital up toward 25%

Urban regeneration: Three-year rolling average return on capital up toward 20%