Morgan Sindall shares soared sharply after the construction group updated its annual profit forecast, signalling results significantly ahead of previous expectations. The London-based firm highlighted that profits at its Fit Out division—which includes Morgan Lovell and Overbury—are set to "significantly exceed" earlier predictions, driven by sustained strong trading activity. This upbeat outlook was reinforced by anticipated gains in its construction segment, supported by revenue surpassing initial forecasts and maintaining operating margins comfortably within the target range of 3 to 3.5 percent.

Following the announcement, Morgan Sindall shares jumped over 15 percent, reaching £44.40 and becoming the standout performer on the FTSE 250. Over the past year, the company's shares have appreciated by approximately 72 percent, with a five-year gain of nearly 239 percent, underscoring robust investor confidence in its growth trajectory.

Founded in 1977, Morgan Sindall operates across various sectors, including residential construction, office refurbishments, and public infrastructure upgrades such as sewage systems, railways, and motorways. Noteworthy projects in its portfolio include the Thames Tideway Tunnel, the Northumberland Line, and Plymouth city centre refurbishments. Since the Covid-19 pandemic, the company has notably benefited from heightened demand for office retrofitting. This surge is attributed in part to a “flight-to-quality” among major firms aiming to enhance workplace environments and comply with increasingly stringent energy efficiency regulations.

In 2024, Morgan Sindall secured numerous high-profile contracts within its fit-out division, involving clients such as legal firms A&O Shearman, Latham & Watkins, and Travers Smith, as well as professional services network PwC, fintech company Wise, and banks including Standard Chartered and Lloyds Banking Group. Additionally, it won refurbishment contracts for the roof at London’s Liverpool Street station and completed projects like the new London Institute for Healthcare Engineering building and several fire stations across the UK.

The company reported record-breaking full-year financials for 2024, with a 10 percent lift in turnover to over £4.5 billion and a 15 percent rise in operating profit to £162.6 million. The operating margin improved modestly by 20 basis points to 3.6 percent, reflecting operational efficiency. Its secure order book also grew robustly, hitting £11.4 billion, a 28 percent increase that signals strong forward visibility. Interestingly, while all business segments saw higher revenue, the mixed-use partnerships division did not grow top line, though its secured order book more than doubled to £4.1 billion.

Analyst Andrew Nussey from Peel Hunt remarked that Morgan Sindall's performance across its core construction markets remains strong. While he anticipates some normalisation of revenues and margins in the fit-out division over the medium term, he does not discount the possibility of continued near-term outperformance.

In the wake of the share price surge, there have been notable sales of Morgan Sindall shares by insiders, including Rosalind Morgan, who sold shares worth £1.1 million reportedly for tax planning reasons. This aligns with a broader pattern seen across the construction sector, where executives and associated investors have been offloading shares amid prospective tax changes. Similar share transactions were observed among executives in other construction groups, reflecting market dynamics and strategic portfolio adjustments.

The company’s strong performance has been consistently confirmed across multiple updates, with profit forecasts recently revised up to around £170 million, an 18 percent rise from earlier estimates. This upward revision is largely attributed to the fit-out boom, which continues to drive exceptional volumes and strong financial returns for the group.

Overall, Morgan Sindall’s robust growth and enhanced profitability underscore the company’s strategic positioning within the UK construction market, particularly its ability to capitalise on evolving demands for quality office spaces and infrastructure improvements. With a healthy and expanding order book, the company appears well placed to maintain momentum in the coming years, despite typical sector challenges.

📌 Reference Map:

Source: Noah Wire Services