Morgan Sindall has restored margins to 2% at its mainstream construction business enjoyed after another year of strong growth at the group.
Pre-tax profit at Morgan Sindall Group jumped by a quarter to £81m with construction, urban regeneration and fit-out businesses leading the growth.
Revenue for the year rose 6% to £3bn although a continued focus on contract selectivity saw the forward order book slide by 7% to £3.6bn.
Chief executive John Morgan said said he had now set his sights on achieving an average construction margin of 2.5% this year.
He added: “2018 has been another year of strong growth for the group.
“Our strong balance sheet, with net cash throughout the year and a business which continues to generate positive operating cash flow is a significant differentiator for us.
“This provides us with the flexibility to continue being highly selective with bidding in our construction activities while also allowing us to invest in our regeneration activities.
He added: “Looking ahead to 2019, we are confident of another good year of progress and the group is in a strong position to deliver on its expectations.”
At the main divisions, the ongoing focus on contract selectivity and risk management enabled the Construction & Infrastructure business to deliver an operating margin of 2%, up from 1.5% on the prior year and an operating profit of £27m, up nearly a third.
Fit-out had another good year with revenue growth of 13% and an operating profit of £43.8m at a margin of 5.3%.
Property Services benefitted from successful contract mobilisation and operational improvements in delivering an adjusted operating profit of £2.0m.
Among Morgan Sindall’s regeneration divisions, Urban Regeneration produced a very strong performance, doubling operating profit to £19.6m.
But Partnership Housing was impacted by operational issues in contracting, which resulted in operating profit lower at £12.2m (FY 2017: £14.1m).
Although Investments made further progress with developing its portfolio of property partnerships, slippage in some of its existing schemes led to a loss of £2.4m in the year.