Carillion’s share price collapse last week capped off a difficult twelve months for the UK’s construction industry, with slowing activity since the EU referendum prompting profit warnings from multiple groups, while fears of an economic slowdown stoke worries about the year ahead.
However, at least one company in the sector is feeling positive. Shares in building and infrastructure Morgan Sindall jumped 9 per cent on Wednesday after it predicted its full-year results will be “significantly ahead” of expectations.
In an unscheduled update on Wednesday, Morgan Sindall said improvements in its office fit out business and its construction arm put it on track to report profits of £23.5m for the first half of the year, 45 per cent higher than last year.
The company said it expects to see further improvements in the second half of the year, meaning full-year results will likely be much better than it had previously forecast.
Shares in Morgan Sindall have more than doubled over the last 12 months as the company recovers from a series of profit warnings linked to cost overruns and badly-priced contracts agreed when costs were lower.
The latest positive news sent shares in the company up as much as 9 per cent in early trading, and at publication time they were 5.3 per cent higher to £13.14.
Analysts at Liberum said Morgan Sindall’s margins are improving but are “still well below the industry average of two to three per cent, leaving scope for further upgrades. This is more evidence that Carillion is pplaying catch up rather than leading the pack down”.