Morgan to miss trade targets as chief resigns

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CONSTRUCTION group Morgan Sindall yesterday confirmed that it would miss its full-year trading forecast because of tough market conditions.

The company, which is behind a number of major schemes in Yorkshire, also revealed that its chief executive Paul Smith had resigned.

Executive chairman John Morgan will return to the post of chief executive as part of a boardroom reshuffle, which will also see senior independent director Adrian Martin become non-executive chairman.

Morgan Sindall also said it was facing a £10m ($16m) restructuring charge this year, which will include office closures and a redundancy programme.

It aims to make £55m of annualised savings over the three-year period to the end of 2012.

In a trading update, the company said that the market’s deterioration had hit the short-term outlook into 2013, and the company is continuing to be highly selective when bidding for new work.

Mr Morgan was chief executive from 1994 to 2000 before becoming executive chairman and handing over to Mr Smith.

Liberum Capital analyst William Shirley cut his estimate for 2012 earnings per share by four per cent to reflect weaker than expected affordable housing profit.

He had cut his 2013 forecast last month by seven per cent and expected others to follow, which would bring consensus down about 10 per cent towards his estimate.

Morgan Sindall is involved in a number of affordable housing and urban regeneration schemes.

Its construction business is being reorganised to focus delivery through regional hub offices, with a number of smaller offices being closed.

The company said: “Construction remains an important, albeit challenging, market for the (construction and infrastructure) division and has some interesting opportunities in the pipeline. As we outlined at the half year, we are focused on increasing our exposure to the growth sectors of the infrastructure market, in which we have a strong track record; rail, aviation, energy and highways.

“In line with this strategy, we are delighted to have secured a number of key infrastructure opportunities in the second half of the year. In the energy sector, we have been selected by Sellafield as preferred delivery partner, in joint venture, for a potential £1.1bn contract to provide a range of essential infrastructure asset services to the Sellafield site.

“The business continues to win work in rail and in aviation. Major projects have been secured under existing frameworks at both Gatwick and Heathrow airports including a £31m contract at Heathrow Airport to repair and replace the existing wearing course on the northern and southern runways.”

The group is working on a number of big projects across Yorkshire, including Doncaster’s £300m civic and cultural quarter. Muse, the group’s urban regeneration arm, is developing KPMG’s new 60,000 sq ft office in Sovereign Street, Leeds.

KPMG’s office is the first new build development in the Leeds city centre office market since 2006. In August, Muse said it also hoped to develop Leeds’ new medical park at Logic, a 100-acre site close to Junction 45 of the M1, which falls within the Aire Valley Leeds Enterprise Zone.

It is also helping to expand Coca-Cola’s Wakefield bottling plant.