Construction and fit-out group Morgan Sindall (MGNS) has raised its 2026 outlook for the second time this year. The board now sees group pre-tax profit ‘significantly ahead of previous expectations’, which it only set out in February.
Strong trading
The firm operates through several divisions: Partnership Housing & Mixed-Use Partnerships, Infrastructure, Construction and Fit Out. The improved outlook is largely due to strong trading activity and increased visibility in the Construction and Fit Out divisions.
Revenue at the Construction business is now seen at £1.4 billion for the year against £1.3 billion previously, excluding property services. Meanwhile, the operating margin is expected to be at the top of the medium-term range of 3% to 3.5%.
Revenue at the Fit Out division will also exceed forecasts due to the conversion of preferred bidder work and future tenders. Profit will be ‘significantly’ ahead of previous guidance, exceeding the top end of the firm’s £80 million to £100 million medium-term target.
Partnership Housing will show ‘modest’ profit growth, while Mixed-Use Partnesrship profit will be in line with guidance. Finally, operating margins at the Infrastructure division will be at the top end of the 3.75% to 4.25% range.
So far this year, daily average net cash has been £445 million against £372 million last year. For the full year, average daily net cash is expected to top £400 million against £368 million in FY25.
We’ve been banging the drum on Morgan Sindall for several years and it hasn’t disappointed. The business is extremely well run and we like its clear capital allocation policy.
Its markets continue to grow, and the firm is winning new, higher-margin contracts which feed through into higher profits. The only danger we can see is if the shares move to a substantial premium, in which case even a minor slip could see them de-rated again.
Read the press release here: https://www.morgansindall.com/investors/regulatory-news
