Morgan Sindall sees government cuts of 35-40 per cent in construction financing coming around October of this year. Since public sector work comprises 50 per cent of the company’s overall load, the cuts will be painful.
John Morgan, the chairman of Morgan Sindall, said: “School building is being cut dramatically, road building will be cut dramatically, and we will have to wait and see what happens to health and social housing. However, a bright spot regarding health and social housing is funding does not come from the government. It comes from housing associations and local councils.
Morgan Sindall did manage to increase its future orders in affordable housing almost 10 per cent, surging from 1.3 billion pounds to 1.4 billion pounds.
With rival builder Connaught in trouble and close to running out of cash, Lovell (Morgan Sindall’s social housing business) looks to spring forward and gain a leg up on the industry.
Morgan said: “I am more concerned about 2012 and 2013 – we have orders for this year. But we’ve all been expecting this downturn for some time. Construction is going to be flat to falling slightly over the next two years.”
John Morgan co-founded Morgan Lovell in 1977, then merged with William Sindall in 1994.
A recent encouraging moment for Morgan Sindall was, being awarded a 1.1 million pound contract with London Underground finishing work for Crossrail at Whitechapel.
Morgan Sindall had realised profits during H1 of 18.4 million pounds, down 10 per cent and revenues down 14 per cent.
The company has, and will benefit in the years ahead from offering such a diversified product line.