Morgan Sindall-owned business increases revenue 20% amid open market sales slump
Lovell’s operating profit has fallen 18% in the year to 31 December as it sought to offset lower open market sales with more contracting work.
The partnerships housing arm of construction giant Morgan Sindall posted turnover of £838m, up 20% on the £696m reported for the year before.
However, its operating profit fell from £37.4m to £30.5m over the same period.
The firm said it was able to “cushion the impact” of lower open market sales through mixed-tenure activities by shifting towards more contracting activities.
Contracting revenue made increased by 44% to £473m and made up 56% of total Lovell revenue, compared to 47% the previous year. Mixed-tenure revenue fell by 1% to £365m.
It said: “As a consequence of this strategic change in business mix and the lower number of open market sales in the year in the mixed-tenure activities, operating profit reduced 18%” Its operating margin also tightened from 5.4% to 3.6% year-on-year.
Parent company Morgan Sindall announced a record set of results which saw it post a pre-tax profit of £144m last year, a rise of two-thirds, and revenue up 18% to £4.1bn.
Its average daily net cash in 2023 was up 10% to £282m with its cash at the year-end standing at £461m, up from £355m.
John Morgan, chief executive of Morgan Sindall told Housing Today’s sister title Building that more and more clients are running the rule over firms’ balance sheets in the wake of high-profile collapses in the industry.
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He said: ““Having a very strong balance sheet with a lot of cash is very helpful,” John Morgan said. “Clients are very interested in that. We have found housing associations, especially, are interested. Firms that go bust on them, it ends up costing them more and jobs end up being very late.”
He added: “A strong balance sheet tells clients you’re not going to bust on them and you will pay your supply chain on time.”
The one blot in the firm’s numbers was its property services business, which carries out repairs in the social housing sector, with the division racking up an operating loss of nearly £17m from a profit of £4.3m which Morgan blamed on a “catalogue of things. We signed contracts that weren’t good and got hit by mega inflation.”
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He said: ““Having a very strong balance sheet with a lot of cash is very helpful,” John Morgan said. “Clients are very interested in that. We have found housing associations, especially, are interested. Firms that go bust on them, it ends up costing them more and jobs end up being very late.”
He added: “A strong balance sheet tells clients you’re not going to bust on them and you will pay your supply chain on time.”
The one blot in the firm’s numbers was its property services business, which carries out repairs in the social housing sector, with the division racking up an operating loss of nearly £17m from a profit of £4.3m which Morgan blamed on a “catalogue of things. We signed contracts that weren’t good and got hit by mega inflation.”
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